Surface modification is essential to safeguard heat exchangers from premature failure spurred by deterioration mechanisms such as corrosion and wear, which diminish performance. Meanwhile, modifying some substrates with dissimilar materials is challenging due to a mismatch in material properties. Moreover, individual alloy coatings on substrates are usually insufficient in the required material properties, leading to accelerated failure of equipment, especially in power plant industries. This article summarised the knowledge base on functionally graded materials (FGMs) while emphasising how this promising class of novel materials can reduce deterioration. Additionally, laser cladding is established to be a suitable technique for processing FGMs. A particular focus is laid on the laser beam interaction with the FGM and expounding on the processing and material parameters that affect the microstructural properties of FGMs. The development prospects for processing FGMs with superior clad quality characteristics to increase boiler pipes' service life and performance are also highlighted.