Will advisers have to reposition annual reviews as a premium service to justify their fees?

Who needs an annual review?

Just 9% of the UK population paid for financial advice in the last two years, according to consultancy The Lang Cat's Advice Gap Report 2025. I suspect the 91% majority who didn't are not avoiding advice by choice, but instead are people for whom the current model doesn't work financially. Perhaps their needs are simply not complicated enough to justify the ongoing fee, or they don't have the savings to make advice worthwhile.

With that said, it would be a mistake to treat all people as the same. Those navigating complex drawdown, inheritance or significant life transitions benefit from structured, adviser-led engagement. For them, the annual review is a core part of the adviser proposition, and, if even for the sake of peace of mind, the fee feels worthwhile.

Tech enables the new regime – but it's no silver bullet

Removing the mandatory review only works if advisers have the technology to continuously monitor client outcomes and access real-time cashflow and projection updates. Platforms, integrated planning tools and goals-based financial planning software can provide exactly that, flagging when a client drifts off track.

This then prompts contact when it matters and gives advisers a defensible, evidenced basis for suitability without the need for a formal review. The constant visibility this creates is more responsive, more accurate and, for many clients, may be more reassuring than a once-a-year conversation.

Yet technology can only go so far. Clients repeatedly point to peace of mind as the primary benefit of working with an adviser. Royal London's 2025 Meaning of Value research found that reassurance and peace of mind rank above investment performance as the thing clients most value about their adviser relationship. Whether an automated alert or a push notification can recreate those same feelings as effectively as a trusted adviser sitting across the table remains to be seen.

The reality is that this technology is not free, and it is not uniformly available. Enterprise-grade financial planning platforms capable of delivering always-on monitoring carry significant licence costs - costs that are manageable for large national advice firms and institutions, but a material burden for the smaller adviser practice.

For those firms, the most cost-effective way to stay close to clients. Removing the annual review without the technology to replace it removes a touchpoint and makes the annual fee difficult to justify.

The removal of the mandatory review will inevitably change the adviser revenue model. NextWealth found during 2024, two-thirds of advisers identified clients they needed to exit, and over half said offboarding would increase over the coming year, driven by the rising cost of delivering advice and the difficulty of demonstrating fair value to clients with simple needs. The Lang Cat, meanwhile, predicted ongoing advice fees will reduce from 0.8% to 0.6%.

A firm that rightly justified its ongoing fee partly through the structure of a compliant annual review now must justify it on service alone. Without the technology to deliver that service differently, some may struggle to make the case.

The annual review: a premium service?

The well-resourced advisory business - one with enterprise planning technology, a segmented client bank and the capacity to monitor outcomes continuously - has a real opportunity here. The annual review can become an elective premium for higher net worth clients, (especially retirees) and those with complex needs.

For everyone else, always-on monitoring does the job more responsively and at lower cost. NextWealth's Fee Benchmarking 2026 report found that satisfaction is highest among clients who fully understand what they are paying for: 97% of that cohort rated value as good or excellent.

The lower value clients that smaller IFAs are offboarding will not disappear. Banks, insurers and large wealth managers - institutions with scale, digital infrastructure and deep existing customer relationships - are actively positioning to serve them at lower cost. The FCA's targeted support regime is designed precisely for firms that can operate at volume.

For IFAs, the strategic imperative is becoming clear: Retain the review, but reposition it as a premium, elected service for clients who want structured, in-depth engagement.

Advisers must be honest about which parts of the client book remain sustainable. The market is beginning to show two sides: firms with the technology and capability to serve clients differently, and those without - squeezed by regulators raising the bar on suitability and by institutions that are rapidly building out their own planning infrastructure to compete at scale and lower cost.

This article first appeared in Professional Adviser.