FSA data shows drop-off in IFA numbers
The number of financial advisers nationally has shrunk significantly since the retail distribution review was first mooted, industry figures sourced from the FSA have revealed.
According to the data, the number of directly authorised firms providing financial advice has fallen from a high of 5584 in September 2008 to 5482 at the end of 2011.
The number of appointed representatives has dropped from a high of 9372 in September 2008 to 8590 at the end of 2011.
Since January 2006, the year the City watchdog unveiled its plans for the RDR, there were 875 sole traders. This number has fallen to 779 as at 31 December 2011.
The number of firms holding client money for investment business has likewise fallen, from 119 to 85 over the same timeframe.
Estimates from consultancy Ernst & Young’s Industry Study in 2010 predicted the number of registered individuals would fall from 30,000 to 20,000 within the five years to 2015.
E&Y also said consolidators would be snapping up small firms of IFAs as a result of the higher qualifications threshold and downward pressures on profitability resulting from the RDR.
Andrew Hannay, director for Edinburgh-based Robson Macintosh, said: “A lot of people will continue to leave the industry and this is largely to do with the RDR and their age.
“Many older advisers may decide this is their last year and, whether they are retiring physically or going somewhere else, I do see a significant amount of shrinkage in the industry.
“We have already taken on the book of one adviser, although here in Edinburgh, any consolidation has tended to be among the small wealth management firms so far.
“That said, for a young person who is RDR-qualified, financial advice can be a great career and there will always be a market for high-end financial planning.”