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Fighting fit
Revenues have fallen this year and some have been consolidated, but the spirit of advisory services remains as strong as ever
Lighthouse has been an active acquirer so far. Last year it bought wealth manager Sumus Plc and this January it acquired IFA firm Godfrey Pearson.
Mr Hickey said Lighthouse will see most opportunities in the market because firms which are looking to sell know the group has got enough cash to make transactions.
The implementation of the RDR's new proposals regarding prudential requirements, professional qualifications and methods of remuneration has also pushed more firms into selling their businesses or merging.
These new requirements by the FSA look set to shake up the adviser market, with the outlook for the industry remaining tough for the next three years.
Mr Davis said consolidation will definitely continue over the next year. "You just have to look at the names going out of business; it is survival of the fittest. I think there will be three to five large firms that will dominate the space in a few years time. You need to have scale in order to cope with the costs."
Mr Young also expects there will be fewer firms in the years to come. "It is a natural reaction to the environment that we are operating in. The RDR will require huge levels of investment so consolidation is a reflection of where we are. We are investing a lot of money into our advisers to get them to the right level."
According to Mr Cummings, Aifa has been focusing its efforts on helping those who lead or own IFA businesses to understand the wider RDR picture. He said advisers need to review their business model to make sure it is still profitable.
Mr Cummings said: "This will be the biggest challenge over the next three to four years."
This is backed up by John Simmonds, chief executive of Bluefin Advisory Services, he said: "The major challenge as the market recovers will be for advisers to implement the necessary changes to their business model to become wholly RDR-ready – and to take advantage of the many opportunities it offers."
Mr Simmonds added: "The last 18 months have demonstrated the folly of attempting to predict the future with any degree of certainty. Of course, one would hope for a swift recovery but, in case it is longer in arriving, advisers need to operate within a business model which is sustainable and with suitable diversified revenue streams."
Tanya Powley is senior reporter of Investment Adviser
