Article 7 financial planning trends in 2023 and beyond

The world’s changing fast, and we’re all having to adapt quickly to it to plan for the future. Trends in financial planning are shaped by a multitude of factors beyond the industry itself. Inflation, new regulations, enhanced customer expectations – as well as the current cost of living crisis – are just some of the fresh challenges to work with. But, these pressures often come with opportunities, such as reaching a new digital client base – or capitalising on the increased demand to protect clients’ finances amidst economic changes.   

With this in mind, here are seven of the biggest financial planning trends shaping the industry in 2023 – which may continue throughout this decade.

7 financial planning industry trends

1. Increased wealth transfer to women
2. Longevity and social care plans 
3. Digital technology changing advice models 
4. Roboadvice becoming more appealing  
5. Sources of returns could be lower
6. Keeping up with regulatory changes 
7. Increased demand for responsible business practices

1. Increased wealth transfer to women 

Europe’s most wealthy will pass on $3.6 trillion of their assets by 2030.¹ In the UK, the top 10% of heirs born in the 1980s have parents with a 'per heir' wealth of £530,000 or more, according to the Institute for Fiscal Studies.²

We’re also likely to see women controlling a greater share of assets in the future. In Western Europe, female investors already control roughly one-third of total assets under management. According to McKinsey, this share is expected to grow rapidly in line with the number of married women taking responsibility for household financial decisions. It predicts that women’s assets will grow at 8.1% per year until 2030, compared to 2.7% for men’s assets.³

2. Longevity and social care plans

Clients might live to nearer 100 in the future. That’s a longer retirement to fund and it raises questions about how to pay for social care in later life. While the government has capped the personal expense of care at £86,000 in England, this does not include daily living expenses for people in care homes, so the true figure could be much higher.⁴ With the NHS under increasing pressure, private medical care may also factor into people’s wealth planning. 

3. Digital technology changing advice models 

It's increasingly common for financial advice to be served digitally. Clients demand a seamless digital experience and it's no different when it comes to their finances. If you haven’t already, investing in the right technology to adapt to financial trends can be crucial. You might want to consider drafting in third party consultants to help you make the transition.   

4. Roboadvice becoming more appealing 

Cheap roboadvice services are likely to capture more of the market – making things more competitive. It’s predicted there will be 3.5 million users of this type of service by 2027.⁵ Although offering more bespoke, tailored and personal financial advice is something that an algorithm can’t offer. 

5. Sources of returns could be lower

If inflation and volatility are here to stay (at least for a while), finding inflation-beating sources of returns might be tricky. You’ve probably seen client demands change in the post-Covid environment, with the cost of living crisis reshaping their priorities and finances too. 

Many financial advice firms are also recovering from the pandemic’s impact, pivoting to do business differently – 3 in 10 saw their profitability decline between 2020 and 2021.⁶ However, with financial volatility forecasted, demand for professional advice and support is likely to increase in the year ahead. Possibly beyond too.

6. Keeping up with regulatory changes 

Expect more rule changes to come as the FCA sharpens its focus on the environment, social issues and corporate governance (ESG) – plus Consumer Duty and the Appointed Representative regime. In the meantime, you can read the latest update from Steven Cameron on the new Consumer Duty to learn what this means for you, and the financial advice industry as a whole.  

7. Increased demand for responsible business practices 

You’ll already be aware of this trend, so just a quick recap. It’s becoming more apparent that clients are increasingly wanting to put their money into responsible investments. From our sustainable investing research (conducted in May 2022), 69% of respondents said they would be interested in investing sustainably if the broader impact or benefits were clearly set out – and 39% said they were interested in investing sustainably because of their personal values.⁷

We also found from our most recent research in August, that 56% of respondents said they’d like to hold funds or other investments that could be categorised as responsible or sustainable. 62% said ESG is important when making investment decisions and 71% want to know which types of companies are excluded from a fund. 

Putting responsibility, inclusion and sustainability at the heart of businesses is a necessity. These are becoming part of regulatory expectation, not just good practice or a ‘nice to have’. Those that do it authentically, and well, could grab market share from traditional rivals who are slower to embrace this.

Adapting to the fast changing environment 

Like any other decade, there are always new trends shaping the financial advice industry. Keeping up to date with these changes presents new opportunities for you and your clients.