Beware of putting all your eggs in the digital basket
There’s still a place for a boutique offering from independent firms, says Peter Shand
You should have some key financial planning dates in your diary, but if you don’t your professional adviser certainly will. Expect plenty of contact from them as they cater for your tax and wealth planning needs over the next couple of years. Politicians and regulators have ensured it is a crowded landscape with myriad changes on the horizon.
Your advisers may also be wrestling with some major issues of their own as they look to ensure their professional service is fit for purpose in a rapidly changing environment. For some firms, this actually represents an existential threat.
The first date to note is 6 April when HMRC’s Making Tax Digital (MTD) initiative is being phased in for businesses, sole traders and landlords earning £50,000 or more. Changes for those earning £30,000 and £20,000 will kick in for 2026 and 2027 respectively. This points to the direction of travel for the advisory community as technology looms large over all of us.
MTD is a quarterly digital reporting requirement that signals the end of the annual paper return. Critics have labelled it a scheme that certainly helps HMRC, but adds to compliance burdens for taxpayers. Time will tell, but “digital” is crawling up behind you in all aspects of financial and tax planning.
This applies equally to professional tax advisers who, from May, will be required to register, digitally of course, with HMRC in a move the authorities hope will increase consumer protection and provide a safer and fairer environment for taxpayers. This digital layer of oversight is clearly important with an ever-changing landscape, including looming changes to Inheritance Tax (IHT) rules in April 2026 and 2027. This could also explain the surge in popularity of trusts, often regarded as a complex planning tool, with one in seven trusts in the UK newly registered from 2024.
So why is this digital enthusiasm a threat to the advisory community? In some respects, we are mirroring issues faced by the banking world. Santander has announced a raft of branch closures, citing the rise in digital banking among its customers. A high street bank is a lesser-spotted beast and the majority of us, not just the younger generations, don’t now know what the inside of a bank looks like.
So why should the legal profession be immune to this general engagement shift?
Clients’ expectations are changing in the way they wish to engage, or not, with us. Routine admin can be done much more efficiently with technology, increasing productivity. But firms beware if they travel down the tech path only.
As baby boomers pass on their wealth, we’re increasingly dealing with a new generation of tech-savvy clients who will undoubtedly have consulted their laptop for AI advice on topics before coming to see us. The key challenge for the profession is to add value in a way AI cannot. The winners will provide a blended service that combines the best of both the tech world and trusted face-to-face advice. Those that don’t will face that existential threat mentioned earlier.
I suspect we’ll see more consolidation in the legal sector and private equity investors are also hovering with over £500 million invested in the UK’s law firms in 2024 alone. Change is happening at pace, but there is still a place for a boutique offering for discerning clients from independent firms. You can put your money on that.
Peter Shand is a Partner, Murray Beith Murray