1. Goal-based planning
Advice is moving away from talking about just money and numbers, it’s very much about what you want to do and when do you want to do it. “Having software available to help us streamline the management of this in one place is extremely helpful,” said Charlotte Walters, Chartered Financial Consultant at Avail Financial Planning.
After Rachel Reeve’s first Budget in October 2024, there are also many other potential changes that will need to be considered next year. If pensions become IHT-able, a lot more people will have to access them.
“If this goes ahead, the whole advice space is going to change quite dramatically,” added Walters.
2. Gender advice gap
A man is more likely to seek financial advice than a woman, and currently in the UK half of advised clients are male and two-fifths (43%) female – the gender of the remaining 7% is not specified. This is largely attributed to the gender pay gap, a lack of understanding and risk aversion among women.
Although there have been various initiatives to tackle this, the gender pay, pension and advice gaps remain stubbornly wide, with some predicting it will take 90 years before the gender pension gap is closed.
Nonetheless, the efforts to address this are ongoing and will be a key feature of 2025 as well as the years after. Increased transparency and education around the need for financial security are a key focus for advice firms, and there are efforts to reduce the gender pay gap.
Flexible working, improving recruitment processes and returner policies should lead to women becoming more curious about ways to enhance their pension and savings.
3. Education and coaching
The coaching element of financial planning is becoming more important, especially through market changes.
“We don’t want the knee-jerk reactions, we want the long-term mindset, the classic style of investing for decades rather than days. Strengthening relationships will be key to this, and having evidence behind financial plans,” said Katie Volker, from Volker Financial Planning.
Coaching and educating will play a part in making financial planning more accessible, she added, and therefore help narrow the advice gap.
Coaching and educating will play a part in making financial planning more accessible and therefore help narrow the advice gap
4. Changing market conditions
As much as it is important to think about the long-term, advisers will be keeping an eye on the UK market and economic conditions to help guide portfolio decisions. 2025 is set to be a very different investment landscape to 2024, with a falling interest rate environment, inflation on the downtrend, and new political agendas in the UK and US.
Advisers should be reviewing portfolios with clients for any overallocations to areas of potential increased risk, and seeking new opportunities where they align with client preferences.
5. Artificial intelligence (AI)
In 2025 there will certainly be an increased interest in how financial advisers can benefit from the growing use of AI tools within their practice.
This could be in terms of gathering and analysing data, reducing resources and hours spent on administration tasks, communicating with clients, investment research and even to assist with regulatory compliance. There is an abundance of opportunities within AI for those that are mindful of the drawbacks (negative effect on client relationship and machine failures, for example), as well as the benefits.