Key Trends in 2025 UK Finance

A perfect storm of regulatory change, digital transformation, and evolving investor expectations is reshaping how UK financial advisers manage their businesses, calling for a smarter, more adaptive approach.

To remain competitive, Independent Financial Advisers (IFAs) should expect to adapt to meet growing compliance demands, while inevitably embracing AI-powered tools that enhance efficiency and client engagement.

Here’s what we expect in the year to come:

1. Increasing Regulatory Pressure and Consumer Duty

The Financial Conduct Authority’s (FCA) Consumer Duty, introduced in July 2023, continues to shape financial services, requiring firms to prioritise positive client outcomes over arbitrary processes. The regulatory focus in 2025 will centre on improving accessibility, clarity, and transparency in financial communications.

The FCA is pushing for a shift away from rigid, standardised documentation inherited from EU regulations, allowing firms greater flexibility in how they present investment information. This is designed to enhance consumer confidence by making disclosures more engaging and easier to understand.

Additionally, the FCA is expanding pension support initiatives, offering free guidance to bridge the pension advice gap. With only 9% of adults  With only 9% of adults having recently sought regulated advice and 75% of over-45s lacking a clear retirement plan, there is a strong push to increase accessibility to public financial guidance.

2. The Growing Use of AI and Automation

Firms are no longer just conceptualising AI applications; they are now embedding AI into their day to day, with AI mediated communications and AI software that has a particular focus on data quality and governance

The financial sector is also embracing digital transformation, leveraging blockchain and cloud-based platforms for improved operations and decision-making. AI enables faster financial data analysis, automated compliance reporting, and real-time client engagement through chatbots and digital assistants.

Financial firms are increasingly integrating AI-driven automation into their processes, with adoption expected to grow in the upcoming years.

Automated Suitability Letters alone can reduce compliance workloads by up to 70%, allowing advisers to scale their services efficiently while maintaining accuracy and regulatory alignment.

3. The Rise of Younger, Digital-Savvy Investors

Historically, IFAs have catered to older investors, but Millennials and Gen Z are reshaping financial advice. These younger investors expect digital-first interactions, personalised financial guidance, and a strong focus on ethical and sustainable investing.

Currently, 44% of IFA clients are aged 46-60, while 33% are over 60. Few advisers actively target under-40s due to cost and time constraints.

We are currently on the cusp of one of the largest generational wealth transfers, making Millenials and Gen Z a demographic that future financial advisers should keep an eye on. This new generation of investors demands fast, transparent, and tailored financial services. They are unwilling to wait days for an emailed report and expect user-friendly digital experiences.

Digital-Savvy financial advisers are quicker to adapt, and can deliver engaging, personalised, and compliant reports that align with these expectations.

4. The Growth of Online Investment Platforms

DIY investment platforms continue to gain traction, providing low-cost, automated investment alternatives to traditional asset management. These user friendly platforms are particularly attractive to first-time investors who may later require professional financial advice.

One in four new investors in the UK is now using an online platform, reinforcing the shift towards hybrid financial services. While we believe these platforms cannot replace human advisers, they are redefining client expectations, pushing IFAs to include digital services in their offerings.

To remain competitive, IFAs must combine expert human guidance with tailored digital offerings and adapt their communication style for younger investors who will have become accustomed to platform mediated transactions.

5. Changing Market Dynamics

The UK wealth management sector has been experiencing an ongoing surge in mergers and acquisitions as firms seek to expand market share and capitalise on economies of scale. Large firms are acquiring smaller IFA businesses to boost efficiency and profitability.

Notable M&A activity include Shackleton and True Potential´s expansion, M&G's Acquisition of P Capital Partners, and Evelyn Partners' Potential Sale to Thesis.

With over 300 M&A transactions worth £11 billion in 2024 alone, market consolidation is set to intensify, increasing competition and reinforcing the need for scalable, tech-driven processes.

Environmental, Social, and Governance (ESG) principles are also continuing to play an integral part in investment strategies.

Firms are prioritising sustainable finance to meet growing investor demands and regulatory expectations, influencing product offerings and advisory services

Furthermore, recent data indicates a decline in the number of future financial advisers in the UK. In 2023, there were 286 fewer advisers compared to the previous year, with the total number of firms decreasing by 8.1% overall.

With 40% of UK advisers are over 60, many plan to retire within 5-10 years.

The talent pipeline is also shrinking, with only 4% of UK professionals consider financial advice as a career path, firms are struggling to recruit & train new advisers to meet demand.

6. Economic Factors That Influence Financial Advice

The Bank of England’s recent interest rate cut from 4.75% to 4.5% is impacting mortgage and savings strategies, prompting advisers to reassess client plans in response to shifting economic conditions.

Additionally, changes in taxation are influencing financial planning. From 2027, unspent pension pots will be included in inheritance tax, encouraging retirees to reconsider wealth distribution strategies to mitigate tax liabilities. These developments underscore the importance of timely, strategic financial advice in an evolving economic landscape.

Embracing Technology for more efficient Financial Services

The financial advice industry is at a pivotal moment. Technology-driven solutions are already helping IFAs save time, streamline compliance, and offer better client experiences.

As technology advances, firms that embrace these innovations will position themselves for long-term success.

As the financial landscape continues to evolve, firms that proactively embrace innovation, whether through regulatory adaptability, digital transformation, or enhanced client engagement, will be better positioned for long term success. Automwrite, financial scaling software, helps advisers reduce time spent on compliance and reporting, allowing them to stay ahead of industry shifts by integrating technology that enhances efficiency and keeps your firm competitive in an evolving market.