Financial Planning firms have cut back on recruitment and growth plans as they reassess ambitions for 2022 due to the cost-of-living crisis, according to a new report.

Recruitment for all roles within advice firms has fallen, according to the report from NextWealth and the Personal Finance Society.

Only four in ten (40%) adviser firms said they were looking to take on new staff this year compared to 59% in 2021.

However, this is still an improvement on the 32% seen in 2020 during the height of the Coronavirus pandemic.

The number of Financial Planning firms who reported growth in client numbers also fell.

Half (49%) of adviser firms said their client numbers remained the same as last year. This compares to 2021 when nearly two thirds (65%) of advisers said the number of active clients had risen year-on-year.

The number of advisers looking to sell their business or exit the market has increased significantly, with 10% planning on exiting this year. This compares with 4% in 2021.

Heather Hopkins, managing director at NextWealth, said: “Where 2020 was a year of drastic adjustments, and 2021 was a year of finding out what the new ‘normal’ might look like, 2022 sees advice firms becoming increasingly cautious. Advice businesses remain healthy – client numbers are steady but growth plans are being curtailed.

“After an initial post-Covid bounce back, when advice firms reported a recovery in recruitment and client numbers, this year we see a return to more cautious estimates. After years of optimism, fuelled by rising markets and growing demand for advice, financial advice firms are scaling back their ambitions amid greater uncertainty.”

NextWealth and the Personal Finance Society surveyed 327 financial advisers between 12 July and 11 August for the Financial Advice Business Benchmark report 2022.

Financial advisers answered questions about the size of their business, their investment proposition, their fees and charges, their technology infrastructure, growth, recruitment and clients.

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