Two fifths (39%) say increasing costs could hit their business over the next year, the survey for Abrdn found.

Firms are also concerned about “simultaneously falling revenues.”

To tackle the challenges firms are relocating offices (29%), investing in new platform technology (28%) and increasing client fees (26%), says Abrdn.

The research of 302 financial advisers in November found that 39% of respondents were concerned that cost increases could threaten their business in 2023.

Advisers also cited worries about falling revenue – either due to clients’ invested assets decreasing in value (46%) or because clients were withdrawing more from their investments (44%).

Abrdn’s research revealed that two in five firms (44%) have, or plan, to make changes to their business to manage the impact of increased overhead costs.

Some 29% have or will relocate their offices – rising to more than two fifths of networked businesses (43%).

A similar proportion are investing in new platform technology (28%), led by directly authorised firms (41%).

Just over a quarter (26%) of firms are or will be increasing fees charged to clients, led by networked businesses (36%).

Jonny Black, strategic director, abrdn, Adviser, said: “Advisers are being hit from two sides. Like businesses across the economy, firms are battling cost increases in everything from labour to energy. Meanwhile, as a lot of adviser charges are percentage based, they are seeing reduced fees because revenue has been hampered by recent market performance and because clients have adjusted their investment levels in the cost-of-living crisis. It’s costs up and revenue down for a lot of advisers.

“Firms must walk a fine line when managing these pressures. There is only so much they can do to reduce operational costs without affecting service levels and their operational effectiveness. Management teams will also be wary of turning to increased fees.”

“Firms are facing stiff operational headwinds. But this year will bring new opportunities for growth. Ensuring the right technology and partnerships are in place will help put them in the strongest possible position to capitalise on whatever arises, and mean they can continue to provide the quality of service that their clients so value.”

• Censuswide surveyed 302 UK financial advisers regulated to give Financial Planning advice on long-term savings like pensions and ISAs on behalf of Abrdn in November.