Financial Planners are ready to change their business models in order to attract the next generation of clients, according to a new report.

Nine in ten (91%) advisers surveyed by consultancy AKG recognised a need to develop different types of service and fee models to work with different client age groups.

Client sectors seen as important for new business included business owners, specialist sectors (such as doctors or armed forces), young families and the families of existing clients.

Half of the advisers surveyed said the cost-of-living crisis was their current biggest barrier to change, with 49% pointing to the impact of cost margins on their firm.

Key issues relating to new client acquisition were regulation (47%), developing new service/fee models to accommodate new clients (47%) and the length of time needed to make new clients profitable (41%).

Advisers had different opinions about what changes were needed:

• A third (35%) of those surveyed said they will need to add a more transactional service/fee model

•  26% said they will need to develop both digital servicing and new charging models

• 16% felt they will need to develop digital servicing capability/functionality

• 14% said they needed to add a charging model to attract families, such as including some free services to next generation clients.

The most common technology investment that advisers said they would require to achieve change was client relationship management systems (51%), followed by back-office systems (46%), open banking/finance apps (44%), client portal/servicing apps (42%) and platforms (32%).

Matt Ward, communications director at AKG, said: “Although some firms may be comfortable with their focus on servicing existing clients, over the longer term those aware of the requirement to future-proof their client base and the value of their business will recognise the need to develop new client acquisition strategies. This will not necessarily be easy, and the situation is exacerbated currently by client wherewithal in the cost-of-living crisis and the perceived cost and regulatory issues facing advice firms.

“While expanding footprint via relationship development with wider family units will play a key role, firms will need to get creative with their targeting, acquisition and servicing strategies for the next generation of clients. This will inevitably require digital/technological support to create cost and process efficiencies but will also need a deeper understanding of future client requirements.”

The report from AKG also asked consumers about their main concerns.

Consumers were most concerned about the impact of inflation and the cost of living (41%) followed by 23% of consumers who were concerned about money matters in general. A fifth of those surveyed were concerned about not having enough savings and 17% felt they were not saving enough for retirement.

• Pureprofile surveyed 100 financial advisers on behalf of AKG during August. Opinium surveyed 2,000 UK consumers between 6 and 9 September via an online survey.