CompaniesDec 18 2014

Towry: Adviser numbers up 9% in 2014

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Adviser numbers have increased by nine per cent this year, which proves that the industry is beginning to prosper following the Retail Distribution Review rules bedding-in.

Speaking to FTAdviser, John Porteous, head of client proposition at Towry, said the second full year of the post-RDR world has delivered a “message of success” for financial advice and wealth management firms.

He said performance metrics that represent successful outcomes for the RDR – greater clarity for consumers, higher professional standards and firms delivering outstanding long-term service – are improving rapidly.

“The fact that the overall advice population is reported to have increased by 9 per cent this year is living proof that the industry is beginning to prosper after a period of transition.”

However the latest Financial Conduct Authority data, published in November, revealed while independent adviser numbers have not significantly reduced since the advent of the RDR, since the start of the year there has been a further 11 per cent fall in advisers at banks and building societies.

According to the FCA, the number of advisers in the bank and building society market fell to 3,182 in October, from 3,556 in January. Prior to the RDR in mid-2012, there were an estimated 6,655 advisers working for banks and building societies.

Overall, adviser headcount has remained fairly stable since the start of 2013, with an FCA spokesman stating “we settled where we were on the eve of RDR coming in”.

FCA statistics revealed the total number of financial advisers only fell by 385 to 21,496 in October, from 21,881 in January.

That puts the total down only 10 per cent from the estimated 23,787 advisers the regulator reported in summer 2012, but represents a 5 per cent increase since the end of 2012, according to the FCA.

On the shape of financial advice and wealth management firms in the last 12 months, Mr Porteous said one of the big features of 2014 for financial advisory firms was that mergers have been high on the agenda for larger firms.

Deals like Old Mutual’s purchase of Quilter Cheviot and Rathbones’ acquisition of the discretionary fund management arm at Jupiter Asset Management stand out for him.

Mr Porteous said: “My own role at Towry came about as a result of the company’s acquisition of Baker Tilly Financial Management, initially announced in April and completed by July this year.

“What has become increasingly clear in 2014 is the extent of divergence between those firms who possess the skill, abilities and resources to thrive as a result of RDR, and those who have been constrained by scale or access to expertise.

“The high watermark of regulatory expectation will do little to ease this potentially widening gap looking forward.”

He added that while scale is not the “single determinant of durability or success, it certainly offers strategic support to any firm that is client centric in its focus”.

“By way of summary, it is important to reflect that the post RDR transition has been played out against the backdrop of fairly supportive asset markets. This has given a stable platform for investors and their advisers to redefine their relationship within the framework of more structured service propositions.

Mr Porteous said that this investment environment cannot be expected to last forever, and firms must be prepared for turbulence to hit at some point in 2015, particularly given the uncertainty of the political climate in the UK and the potential for further deflation across the Eurozone.

“Those firms who have effectively linked their investment philosophy with a robust planning led approach should prosper under such circumstances.”

emma.hughes@ft.com