Three-quarters (75%) of advisers have experienced a negative impact on gross revenues due to the Covid-19 pandemic, with a fifth forecasting a decline of at least 20%, research by the PFS and NextWealth has uncovered.

The Personal Finance Society’s (PFS) and Next Wealth research found small firms with two to five employees have been hit hardest by the pandemic, with 83% of small firms reporting a decline in gross revenue.

Despite the decline, financial planners reported customer numbers were up year on year, with nearly half (45%) of planners saying they were working with more clients this year than last, and 44% reporting new client enquiries are picking up.

Just 5% of respondents reported a decline in client numbers year on year.

The research was based on the answers of 365 PFS members surveyed between 31 July and 12 August.

Next Wealth managing director Heather Hopkins (pictured) said: “Financial planners adapted quickly to remote working but the inability to meet prospects face to face has taken its toll on financial advice businesses.

“All indicators point to a rapid recovery with new client enquiries picking up again. While technology enables the advice process, our analysis reveals that financial planning relationships still rely heavily on an initial trust-building face to face meeting.”

Faced with shrinking margins, the research found less than a third (30%) of firms had analysed their workflows to identify bottlenecks, and two-fifths (39%) of firms were not listing out tasks, contacts and events that should occur at each step in the process of creating and delivering a financial plan.

Changing profile

Elsewhere, the research revealed a gradual changing profile of financial planners. More than a quarter (28%) of financial planners under the age of 44 are female, this compares to only 10% for those aged 55 and above.

There has been a 6% increase in firms awarded Chartered status in the past year. A third (32%) of firms have now been awarded Chartered status with a further 16% working towards it.

More than half have achieved Level 6 (i.e. CII advanced diploma & CISI certificate in advanced financial planning), with Level 7 qualification being the ultimate qualification held by 16%.

PFS chief executive Keith Richards said: “We are also seeing a rising demand for ‘soft’ skills training, such as positioning and conversational skills. It is in these areas that advisers can really learn about their client and demonstrate the value that they are giving.”

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