Thinking Time
Season’s greetings to you all!
For those who have been receiving my emails for a while (some for over 14 years), you will know I like to call this period between Christmas and New Year my “Thinking Time.” It is a quieter moment for reflection and planning as we look toward the opportunities and challenges the new year might bring.
2024 has certainly been a year many of us will be glad to leave behind. From escalating conflicts and cost-of-living concerns to stagnating growth and widespread social and political unrest, the news has often been difficult to digest.
So, as we prepare for 2025, what is in store for you and your firm?
While the UK economy is demonstrating resilience, 2025 is shaping up to be a year of, at best cautious optimism. Government policy adaptations and external pressures will play a significant role in determining the economic landscape. Thus, preparing for potential risks, regulatory changes, and capitalising on growth opportunities will be essential.
Regulation remains key.
Our ever-active friends at the FCA are set to implement several more regulatory changes in 2025, which will undoubtedly impact businesses in the UK financial sector. As I have mentioned before, we are still at the early stages of the Consumer Duty journey. With the FCA committed to enhancing market integrity, consumer protection, and financial stability, we should anticipate further compliance obligations and the associated operational costs.
Their aim to “foster a secure and competitive financial environment” underscores the importance of staying informed and engaged with consultations to navigate these changes effectively.
Looking ahead: Attracting younger clients.
One of the major challenges for IFAs in 2025 and beyond will be attracting younger clients. Developing a strong new business acquisition strategy is vital. I am still amazed at the number of young people who are more aware of cryptocurrency “investments” than any other type. Maybe it’s a generational thing, the appeal of “get rich quick” crypto investments over the balanced, long-term strategies we advocate.
A lack of understanding and education around the risks and benefits of various investment options could lead many to make short-sighted decisions with their money.
As IFAs, we can help. I have mentioned before, I believe the successful IFAs of the future will be the ones that have embraced the changes that our ever more complex world is demanding, changes that amongst other things will streamline communication with clients and help deliver better outcomes for them.
There is no doubt that effective communication can lead to an increase in revenue and whilst an increase in revenue is not always at the forefront of every IFAs mind, increased revenue does normally equate to a higher business valuation when eventually you do want to sell.
Sadly, many of my industry colleagues are now retiring or have already retired and I expect a good deal more will retire this coming year, especially with the Increase in taxation to 14% for disposals on or after 6 April 2025 with a further increase to 18% for disposals made after 6 April 2026.
I know that many business owners derive a sense of purpose and fulfillment from their work, which can make stepping away challenging.
As we move into 2025, I encourage you to remain proactive, adaptable, and open to new opportunities. I urge all of you to think where you want to be in twelve months’ time and the steps you will need to take to achieve this.
As always, our consultancy services are designed to assist IFAs in identifying and implementing strategies for sustainable growth. We can help you adapt your business models to remain not only relevant but prosperous.
Of course, if you are thinking of selling, we would be delighted to assist you. I would add that the successful marketing and sale of a Financial Services business requires substantial, carefully targeted effort, both pre-sale, post agreement through the negotiations and post-sale.
Wishing you and your team a successful and rewarding year ahead.