Integrated advice and client outcomes: Bridging the advice gap of the AUM mode

So, why does the advice that guides them remain disconnected?  

According to 2025 research by financial consultancy Autus, 38,612 FCA-registered financial planning firms were offering investment advice, and 34,595 firms were offering mortgage advice1. But only 8,133 of those firms were offering advice across both. 

These siloes are creating a gap. The Financial Conduct Authority found in its interim pure protection market study that 58% of adults don’t hold a pure protection product2. Looking ahead to later life, 35% of over 50s are facing a retirement shortfall of at least a decade3. 

These findings show that many client needs aren’t being met under Consumer Duty. And the impact could be significant.  

Take Charlie, a business owner in his mid-40s with two young daughters. He’s maximising his pension by £60,000 a year, which is paid for by his business. But his wealth manager hasn’t asked him about his personal finances. If Charlie’s business fails, his pension payments stop. His wealth manager’s aim is to look after the portfolio to maximise the assets under management (AUM). But what’s underpinning Charlie’s pension contributions and his ability to work in the first place? What protects him and his family if he can’t work due to a short-term – or critical – illness? Herein lies the problem. 

Cracks in a post-RDR world 

Back in 2012, the Retail Distribution Review shook-up practices that led to mis-selling, product bias and commission. The move to fee-based advice established a new sustainable business model. 

Propositions became based on AUM to build client portfolios, maximise returns and look after clients with an ongoing advice service. Others became product specialists in protection, later life mortgages or retirement. This led to fragmentation that created an unintended consequence: a new advice gap. Protection, later life mortgages and retirement products became commercially unattractive because they reduce the size of AUM, rather than build on it. And many became priced out of advice entirely where portfolios were worth less than £100,000. 

Consumer Duty challenges  

Siloed advice creates a new challenge under Consumer Duty’s cross-cutting rules, which requires firms to ensure good customer outcomes holistically – not just within a firm’s expertise.  

Consider foreseeable harm: statistically, half of us will develop cancer, yet we observe that large sections of the market are neglecting both personal and business protection. Even when protection is offered, clients are more often insured against death—rather than against critical illness, which is actually a far more common risk. While clients readily grasp the importance of life cover, the protection they most need is actually income protection. However, discussions around financial resilience, vulnerability and risk are more difficult—especially when they extend beyond an adviser’s usual area of expertise. 

Consumer Duty also states clients’ financial objectives in later life should be supported. We regularly work with firms to integrate annuities and drawdown to address client concerns about longevity and income sustainability. But we hear from others that their job is to manage wealth, not to mitigate those risks. Or that their clients will get a better return on their investment properties – not a guarantee of financial resilience. 

In its December 2025 Consumer Duty update, the FCA highlighted that some firms are “failing to consider the amounts customers invest and the value they receive for the risks they are taking”, with value assessments that are “disproportionately firm focused”.4  

Under outcomes-focused regulation, are we seeing the best solutions for clients, or firms? 

Time to adapt 

We see these difficulties play out in firms of all sizes – from the smallest right up to network level – and regularly look at the mix of business to improve conversion rates between areas. The 2027 changes to inheritance tax (IHT) make these issues particularly timely. The forthcoming inclusion of unused pensions in estates will force advisers to make integrated advice commonplace to avoid IHT on their clients accumulated wealth.  

The Retail Distribution Review overhaul of the industry 14 years ago has in some ways worked, but the model – and the advisers within it – will have to adapt. 

Advisers will need to help clients take wealth out of property or create income from their pension to gift on a regular basis – which will come with its own protection needs. Firms will have to stop looking at sell-on value down the line and instead touch on new areas that’ll require industry expertise to guide them. 

The answer isn’t for advisers to be an expert in every financial product. It’s knowing when to suggest appropriate routes, recognising the foreseeable harm and knowing when, for instance, a later life mortgage could be a solution. Or thinking about longevity risk and recognising that an annuity could be a good fit. 

Broadening knowledge is the start of better outcomes 

By broadening business incentives so they benefit both clients and firms—for example, through fee splitting for internal referrals—firms can foster greater collaboration and shared value. This approach not only encourages better outcomes for clients, but also helps to naturally close the advice gap, creating a more supportive and inclusive environment across the industry. 

Here are six steps you can take to support building your expertise and achieve stronger outcomes for your clients in alignment with Consumer Duty expectations: 

• Build a solid referral strategy. Hand-pick a network of trusted advisers who share the same values as you.  
• Create a two-party agreement. Start local. Reach out to firms with a different specialism than you and create a two-party agreement for referrals.  
• Agree on joint meetings. Attend meetings with referral partners, where one is the lead adviser for the client and the other is the supporting specialist. Being in the meeting builds your own expertise.
• Be proactive. Particularly with higher net worth clients who you know will have an IHT issue. Ask them what services can you add as part of a wider review.
• Long-term planning over transactional advice. There’s no need to focus on solutions from the start. Understand what they imagine life will look like in five, 10 and 20 years to build a comprehensive picture, and build in time for annual reviews. It won’t all be relevant right away, but you can see what they might need and when.
• Don’t be afraid to ask questions. Be confident to tell your client you can find out more about an area you’re not an expert in. You’re only ever doing right by them. 

How L&G can help 

Whilst we can’t change business models overnight, we can help you integrate advice into your current model. We can help bring propositions together and connect you to the experts. Our specialised CPD training academy and Business Development Managers are at your disposal to help you upskill, build your business and start adding holistic advice to your offering. 

• Tap into BDMs. We have BDMs in every sales team. Speak to those outside of your core specialism and start connecting with experts across domains to widen your horizon and build expert connections in other specialties.
• Explore the Adviser Academy. Watching our CII-accredited webinars can help you get acquainted with protection, later life mortgages, annuities and more, to give you confidence to have those client conversations. 

A focus that’s future-proof 

It’s always smart to think about the evolution of your business, but with close scrutiny from the FCA and IHT changes on the horizon, there’s impetus for skilling up to future-proof your practice and stay compliant. The key lies in relaxing your field of view, prioritising your clients’ bigger picture, and surrounding yourself with a curated network of experts you can trust.