The financial services sector is in a state of dynamic transformation. As we step into 2026, firms are navigating a landscape shaped by rapid consolidation, evolving regulations, and the undeniable influence of technology. For both employers and professionals, understanding these shifts is crucial for success.
Firms adapt to a shifting economic climate
Over the past year, financial services firms have adjusted their workforce strategies in response to market uncertainty and significant regulatory developments. Many organisations have adopted a cautious approach to hiring, choosing to hold fire on recruitment until a clearer economic picture emerges. Except for roles with an absolute business need, hiring has been more reactive than proactive.
However, demand remains strong for specific, critical positions. Level 4 qualified individuals, particularly in technical roles like paraplanning and compliance, are consistently sought after. Financial advisors, who directly drive revenue, are also perennial ‘unicorns’ that businesses are always keen to attract. These roles are fundamental to a firm's success, ensuring both profitability and adherence to strict regulatory standards.
The surge of mergers and acquisitions
One of the most significant trends is the aggressive consolidation sweeping the industry. Smaller, independent firms are increasingly being acquired by large national companies, often backed by private equity. This has created a seismic shift in the market's culture.
Those moving from these smaller acquired firms often cite a change in dynamic as their primary reason for seeking new opportunities. The transition from a close-knit, ‘family feel’ environment to a more hierarchical corporate structure can be jarring. Employees who once had direct access to directors now feel like a small fish in a big pond, leading to a sense of disconnect and prompting them to explore roles in firms that better align with their values.
Technology and AI - the indispensable role
Technology, particularly artificial intelligence, is no longer a futuristic concept but a present-day reality reshaping the sector. AI is becoming prominent in streamlining back-office support functions, with many firms investing in technology to enhance efficiency rather than expanding administrative teams. While the demand for core roles like IFA administrators remains, companies are leveraging AI to automate tasks, freeing up human capital for more strategic work.
This integration of technology is creating a new set of required skills. Experience with AI tools like ChatGPT and Microsoft Copilot is becoming advantageous for professionals at all levels. Firms are looking for people who can utilise these technologies to improve productivity and deliver more value.
The impact of technology extends beyond administrative support. To remain competitive, advisory firms must adopt advanced analytics, machine learning, and integrated tech suites for everything from client onboarding and cash flow modelling to generating suitability letters and monitoring portfolios. Technology that can simplify complex financial information - such as pensions, investments, and tax planning - into understandable formats for clients is essential for enhancing the customer experience.
Building the next generation of talent
With a recognised shortage of experienced, high-calibre financial advisors, a growing number of firms are choosing to home-grow their own talent. We are seeing an increase in trainee advisor roles and academy programmes designed to cultivate the next generation from within. These initiatives offer a pathway for those in technical roles, such as paraplanners, to transition into advisory positions.
This strategy offers multiple benefits. For the employer, it means securing loyal, committed individuals who can be trained according to the company's specific processes and values. For the employee, it provides a valuable opportunity to advance their career that might not have been available otherwise. While it takes time – often six-to12 months - to get a trainee fully qualified, the long-term return on investment is a competent, loyal advisor.
Companies are also investing heavily in upskilling their existing teams. There is a strong emphasis on professional qualifications, with Level 4 being the minimum standard for many roles. To attract and retain talent, employers are offering comprehensive support for exams, including covering the cost of materials, providing study leave, and even offering bonuses upon qualification. This commitment to continuous professional development is a key differentiator in a competitive market.
More than just a salary
While salary remains a crucial factor, the overall remuneration package and workplace flexibility are now equally important for those looking for work in the sector. The conversation has shifted from basic salary to the total value of an offer.
Hybrid and dynamic working arrangements remain a top priority. Professionals now expect a degree of flexibility, and employers who fail to offer it find themselves at a significant disadvantage in attracting the best people to their company.
Benefits can make or break a job offer. Those looking for or accepting a new job are scrutinising packages more closely than ever, and a strong offering can persuade a professional to accept a role even if the base salary isn't significantly higher than their current one. Key benefits that make a difference include:
Generous pension contributions: Moving beyond the standard auto-enrolment to offer enhanced contributions.
Comprehensive insurance: Life insurance (death in service) at four times salary or more, and private medical insurance that extends to dependants.
Flexible holiday allowance: More than the statutory minimum, with gifted days over periods like Christmas.
Salary sacrifice schemes: Allowing employees to exchange part of their salary for non-cash benefits, such as travel season tickets.
Practical support: Perks like covering travel or parking expenses for office-based days can be a surprisingly powerful incentive.
Smaller firms often have an edge here, as they can be more agile and create bespoke packages tailored to an individual. Larger nationals, bound by rigid structures, can find it harder to compete on this front. Benchmarking both salary and benefits is now essential for employers who want to attract and retain the best people.
A look ahead to 2026
As we move through 2026, several key trends will continue to shape the financial services landscape.
1. Continued consolidation: The mergers and acquisitions surge shows no signs of slowing down. Driven by private equity investment, succession planning, and rising compliance costs, the consolidation of smaller firms into larger networks will remain a defining feature of the market. We can expect to see more acquisitions as larger entities look to gain digital capabilities and market share.
2. Intensifying regulatory pressures: The Financial Conduct Authority’s Consumer Duty will remain a cornerstone of regulation, demanding fair value and clear communication. Firms will also face tightening prudential standards and rules around operational resilience, particularly during acquisitions. ESG (environmental, social, and governance) compliance expectations are also set to rise, adding another layer of complexity.
3. Technology as the great enabler: Technology transformation will be critical for survival and growth. The adoption of AI, advanced analytics, and integrated platforms is no longer optional. Firms that successfully leverage technology to enhance client experience, streamline operations, and simplify complex information will pull ahead of the competition.
4. The talent war evolves: The competition for skilled professionals will persist. Firms that succeed will be those that invest in their people - offering clear career progression, supporting upskilling and qualifications, and providing flexible working arrangements alongside a compelling benefits package. The focus on home-growing talent through training academies will likely become even more widespread as a long-term solution to skills shortages.
In summary, the UK's financial services sector is becoming more consolidated, tech-driven, and compliance-heavy. While smaller firms face mounting pressure, the larger, private-equity-backed networks are shaping the future. For professionals, this environment presents both challenges and opportunities. Those who embrace continuous learning, adapt to new technologies, and understand their market worth will be well-positioned to thrive in the exciting year ahead.
For more insights into the insurance and financial services labour market and for reliable salary benchmarks for the sector, download Reed's 2026 insurance and financial services salary guide here.
