Wealth Management Predictions for 2025: When Small Changes Lead to Big Results

These are our predictions of the trends that will reach the tipping point in 2025 and impact platforms and advisor practices. A tipping point doesn't imply mass adoption;  it's instead the critical moment where a minor change can lead to significant and irreversible effects or developments. Think of it as the point of no return—things rapidly shift and escalate once reached. We have written this post with that idea in mind, with 2025 being the year that the following four key events will gather sufficient momentum to be unstoppable.

1.                  Platform extinction will begin. Who would have thought at the beginning of 2024 that the mighty FNZ would be closed to new business and that M&G would fail to sell its Bravura-powered platform? While these two events are unrelated, the plain truth is that too many platforms are trying to address the same market. New entrants are making life difficult for those that are subscale (think less than £15 bn AUA), supported by legacy technology, and burdened by PE debt. The kicker for 2025 will be the emergence of multiple case studies that prove beyond doubt that replatforming doesn't have to be a leap of faith. As Martin Jennings pointed out in his 2025 predictions (definitely worth a read), Platform Outlook: Flight to Quality transfer aversion is an emotional barrier driven by Fear, Uncertainty, and Doubt. Two catalysts will remove the FUD:

• Service failures impacting customers. This is a rachet effect; once the pain point has been reached, there is no way back.

• The emergence of systematic transfer processes. Enabling multi-million-pound books of business to be transferred with certainty in hitherto unprecedented timescales and  zero costs to firms.

It is possible to transfer a £1bn book as a series of automated tranches within a project lifecycle of 6 months or less. The economics are simple; the ROI is typically achieved at month 9, permitting the receiving platform operator to offset the modest cost of transfer funding against the ongoing platform fees generated.

We predict  that £15bn to £20bn of assets will moved in 2025. I asked Industry veteran @Dave Ferguson for his 2030 predictions and he took a punt that circa  50% of the total of advised assets (£280bn in round numbers) could be transferred off.

This has implications for PE-funded planned platform exits. Why pay a premium for assets when you can work with motivated firms to move them in only 6-months for a fraction of the cost? Subscale platforms that rely on unintegrated third-party legacy technology will not be saleable at anything like the anticipated pre-deal valuation. Those constrained by debt, unable to invest in new technology, and propped up by interest on cash will wither on the vine or be subject to a fire sale. Some PEs that relied on scale-driven multiples without any meaningful attempt at sustainable value creation will get a kicking. Those committed to tech innovation, integration, and automation will thrive.

 2.                  AI becomes the new electricity. @Mustafa Suleyman, CEO of Microsoft AI and author of The Coming Wave (a fantastic read full of facts and reasoned arguments), described AI combined with LLMs as the new electricity. I buy into this view, and whilst it won't be as ubiquitous in 2025, it will drive efficiencies to eliminate administration and compliance efforts by automating meeting notes, case reviews, suitability reports, and workflows. Early adopters have already cited 40% productivity improvements. But this is the tip of the iceberg. AI and trusted LLMs have the potential to provide holistic advice by offering fluent, accurate answers to a range of much more nuanced and complex questions and scenarios. Prompt engineering will be recognised as a new and highly valuable skill set that successful firms and their employees will add to their capabilities.

 3.                  The Advice Gap will become more polarised. The excellent Langcat report The Advice Gap summarised the nation's state in one easy-to-understand infographic. The headline statistic was the reduction in consumers paying for advice, down from 11% in 2023 to 9% in 2024.  One of the unintended consequences of Consumer Duty has been for some firms to reevaluate their client base and focus on those clients that have already accumulated significant wealth or have the potential to do so. This leaves an opportunity for new entrants to deliver an economically viable digital-first advice proposition.

Tech-enabled platform providers like P1 and Fundment offer full-fat platforms, whilst the likes of Seccl and Hubwise support Adviser as Platform models that are easy to use and adopt. Given the combination of AI, LLMs, and platforms highly integrated within an advice ecosystem (ideally not visible behind the CRM), it's easy to envisage nimble new entrants supporting much higher client numbers, without compromising service integrity and relationships.

Modern technology adoption and new ways of working will bring the economic benefits of scale and reduced Cost-to-Serve without the need to be big.

4.                  The resurgence of industry and regulatory pressure. In September 2024, the Platform Association was launched to represent and provide a voice to the £1trn investment platform sector. The launch marked a more proactive approach to how the platform industry will engage with regulators and policymakers. It aims to bring a united voice to coordinate and promote industry interests. Most of the major players are on board, and two of the five fundamental objectives are:

• Regulatory Engagement. Influencing change so that platforms can operate efficiently in a regulatory framework.

• Operational efficiency and standards. Coordination of  collective action and best practices for the benefit of platform operators, financial advisors and underlying investors.

Top of their agenda should be tackling asset transfer delays; pressuring the FCA to set clear SLAs that have bite, and the small number of platform operators (some are members) and ceding providers who don't play nicely.

Delays driven by inadequate capacity of transfer out teams or the lack of automated technology are totally unacceptable. SLAs should be mandated and enforced for the greater good of providers and their investors. Getting on the front foot and demanding more from the regulator and industry players would be a welcome gear change.

Cash transfers (if done well) can occur through a disinvestment-transfer-investment cycle within a 5-to-10-day timeframe. A fragment of time is over when considering a 5-to-10-year investment window. Until the FCA focuses on this and the slowest members of the industry get their act together, advisers should see cash as the de facto transfer mechanism. After all, Consumer Duty and foreseeable harms arguably make it the option with the best client outcome. Ultimately, predictability, ease, and reduced timescales will trump out-of-market risk.

We hope you have enjoyed this post and look forward to your comments. If you want to learn more about our automated transfer analysis, please get in touch.

One final thought: Winston Churchill coined the phrase "Perfection is the enemy of progress." The fundamentals of our industry are about to be transformed by advances in technology, customer experiences, and efficiency benefits these will drive. @DaveFerguson quoted Hemingway's character from The Sun Also Rises when asked how he went bankrupt: 'Two ways. Gradually, then suddenly.' Significant shifts or transformations often happen slowly and imperceptibly at first before reaching a critical point where change accelerates rapidly and becomes unstoppable.