Predicting the future without a reliable crystal ball is an onerous task but the consensus among Financial Planners is that the industry will undergo huge change over the next decade, writes Nicola Brittain.
Influencing factors include technological innovation, the aging population, a desire to close the advice gap and increasing complexity in people's lives. Similarly, shifts in the macro-economic environment are likely to affect the sort of investments made and even where clients are based.
Managing director of Bloomsbury Financial Planning and CFP Jason Butler said: "It is likely that many of the current tensions in the macroeconomic environment will have been ironed out by 2024. The EU will be working harder to compete in the global market, China will have opened its borders, the US may have become an economic also-ran and perhaps Russia will have been divided into two economic territories. Changes like these will alter financial planning advice at the investment level."
He added that a continuation of the current low real return environment may mean that those with most money to invest may stop expecting the sort of returns they once experienced.
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Butler also said there is likely to be a 'seismic shift' in the distribution of wealth over the next ten years with the most wealthy demographic (the baby boomers and recipients of final salary pension schemes) having redistributed wealth to their children or grandchildren. Younger people are likely to make up a higher percentage of a planner's client base in 2024.

Technology
The most obvious catalyst for industry change is technological innovation. One of the biggest changes caused by technology to date has been the growth in the Direct to Consumer (D2C) channel and the direct sale of mass market products via the internet. Danny Cox CFPCM and head of Financial Planning at Hargreaves Lansdown expects this growth to continue over the next ten years. He said: "D2C investment will be even more central to the financial market by 2024. Further availability of information and services on the internet can only mean increased use of D2C."
Mark Hoskin CFP at Holden and Partners is concerned that the growth in these services will increasingly squeeze the income available to the financial planning industry. He said "In theory D2C services service the mass market rather than the more wealthy clients targeted by planners. But I expect clients to become increasingly price aware over the next few years.
"They will begin to look closely at the cost of advice. If 1% of their yield on investment of 2.2% is paid to an adviser, they are effectively losing 25-30% of their income. This may begin to seem like too much."
However, advances in technology will start to allow planners to offer their services at reduced rates and so compete more effectively. Lee Robertson, an IFP member and financial planner from Investment Quorum, said: "The US has more advanced technology than the UK and internet-based financial planning services such as Learnvest.com and Betterment have become very popular."
"These services offer quality advice from financial planning professionals at a much lower price than face-to-face advice. I can envisage older and more established D2C platforms moving beyond funds at discount charges to offer virtual services within the next five years."
In addition, many financial planners, such as Phil Billingham CFP and operations director at Perceptive Planning, argue that advances in technology will see the distribution of mass simplified products via outlets such as Tesco and Sainsburys.
He said: "These supermarkets hold reams of data on their customers. They will know who is eligible for an ISA or how much customers have invested in their SIPP. A checkout assistant might encourage an ISA top up when a customer is buying groceries. Economies of scale could see the cost of these products reduced from say 100bps to as little as 5-10bps."
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Similarly, Billingham argues that Amazon has the scale to be able to sell products such as ISAs or insurance to the mass market. He said: "It could recommend financial products in the same way it recommends books. It might say 'you recently bought this house insurance, would you like to buy life or health insurance?'"
Billingham added: "Of course, supermarkets won't be able to say 'this area of your finances should be in trust' for example. The client would need to see a planner for more complex services like this."
Jason Butler argues that technology advances are likely to engage young people in financial services.
"As the TV morphs into the internet we are likely to see virtual and real-time advisers engaging with clients in new ways," he said.
"Planning firms might offer internet entertainment services as the first step to financial advice. I can imagine young people playing online games in which they are asked to compare their wealth with celebrities such as Rihanna or Justin Timberlake when they were the same age."
"Entertainment like this would be one way in which firms could engage with customers. Then as a client's needs become more complex the firms could offer different tiers of service on any interactive platform."

Deregulation / mass market products
One problem that most planners hope will have been addressed by 2024 is the advice gap. And there is a consensus that to successfully address this, parts of the market would need to be simplified and deregulated.
Evolve financial planning director and CFP Jason Witcombe said: "To enable the distribution of mass market products over the next few years we need reduced regulation. This might create space for the introduction of kite-marked or simplified products and this would reduce the cost of financial advice making it more accessible."
He added: "Planners have to create 50-page 'know your client' reports for clients regardless of whether they have £1,000 or £100,000 to invest. They simply can't take on clients without significant wealth."
Billingham said that the UK could take a lesson from South Africa where light-touch regulation has helped to reduce financial exclusion. He said: "People are able to manage savings accounts via their mobile phones. Services like this could be linked to some level of financial planning advice in future. In my view, financial planning shouldn't only be the preserve of the wealthy."
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The advice gap
Steve Martin CFP and managing director at Smart Financial said that to close the advice gap over the next decade the regulator must undo much of the regulation created since 2007.
He thinks the regulator made a 'catastrophic mistake' by grouping high-end certified financial planners and advisers with those selling simple products such as insurance or other forms of protection. Both experience the same level of regulation.
He said: "By 2024 I would hope that the regulator has reversed this wrong. It must distinguish between insurance salespeople with a basic understanding of finance from highly qualified financial planners with decades of experience. The deregulation of the bottom end would broaden access to services in a way that the proliferation of information on the internet won't. Some people just don't have the inclination to do the research themselves, but that doesn't mean they don't need protection. An overturning of previous regulation would help these people."
Investment Quorum's Robertson would also like to see changes to regulation over the coming years. "A young person can get into debt in three or four clicks but must fill out 150 pages to get a savings vehicle. I hope this will have changed by 2024."
Shape of the industry
Many planners expect the financial services industry to change shape considerably over the next decade. Smart Financial's Martin said: "I expect that by 2024, the IFA tag will be dead and integrated and holistic planning will be the only game in town." He also said that the balance of power will have shifted into the hands of planners and clients and away from big investment and insurance firms. "In ten years time, planners will be centre stage while insurance companies and investment houses – which will no longer be able to differentiate on product - will have more of a back-office function."

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Pensions 
Problems currently faced by the pensions and at-retirement industry will have been addressed by 2024 according to Investment Quorum's Robertson. "Asking young people who are burdened with big mortgages to put their money away for 40 years is not practical. Pensions as they are currently are broken for young people.
"However, there are alternatives. For example in the US the tax-qualified, defined-contribution 401k pension is popular. This allows clients to withdraw money at important life events such as when their children go to university. This may be more appealing to young people. Another alternative would be to increase tax, but I don't think there is the appetite for this."
Witcombe also believes that within a decade some of the at-retirement market's complexity will have been ironed out. "The current system (in which there are restrictions on yearly contributions as well restrictions on what the client can save full stop) is almost unworkable," he said.
He also expects the auto-enrolment opt out clause to have been removed and pension contributions to be mandatory by 2024. "Auto-enrolment will help bring about a cultural shift from reliance on a state pension to a focus on individual responsibility. We might see an increase in innovative products that are more appealing to young people over the coming years." Whitcomb also thinks that the age at which people can draw the state pension will have increased again by 2024.

Cultural change 
By 2024 people's lives will have become more complex and financial planning will have to accommodate this. Prospective's Billingham said: A couple of generations ago, people had 2.2 children and women didn't work. In 10 years time it is likely that ordinary people will be working across several tax jurisdictions and have increasingly unusual family structures. In addition, this complexity will leave people time poor and this is where financial planning can help.
He added: "Providers are willing to produce interesting products that cater for this complexity but parameters and restrictions are set by the inland revenue and regulator. We need some clear thinking from these bodies over the next decade."
The way in which financial planners work may have changed to: "By 2024 anything that can be outsourced will be. For example, China will take care of fund management, and India will look after administration. Financial planners may be working with colleagues across these and other territories," said Billingham.
Bloomsbury's Butler also thinks that there will be huge cultural change and that this will influence the sort of planning advice required. He said: "The state is being rolled back meaning people will become increasingly self reliant. They are likely to be better financially educated and this could boost interest in and demand for financial planning."


Key points
Point 1
Advances in technology will see the distribution of mass simplified products via outlets such as Tesco and Sainsburys. They may use the data collate on customers to offer over-the-counter top up ISA services.
Point 2
In 2024 Amazon may be distributing financial products and making recommendations based on those previously purchased. Home or life insurance purchases may see a client offered health insurance. Much of the information already collated will have been retained simplifying the purchase.
Point 3
Financial planners will increasingly offer virtual planning services of the sort already provided by Learnvest.com and Betterment in the US thereby reducing costs. D2C platforms with established technology platforms are the most likely players to move into this space.


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Nicola Brittain currently works as a freelance financial and technology journalist. She regularly writes for trade titles IFAonline and Investment Week. Prior to working for IFAonline she worked as news editor for Incisive Media's Computing Magazine and technology editor for Emap's Broadcast Magazine.
Nicola is currently studying for a masters in Creative and Life Writing at Goldsmiths University. Her first degree was in philosophy and politics with a subsidiary in economics.