Restricted adviser numbers doubled last year but independent advice still dominates, with data published in a report by the Association of Professional Financial Advisers revealing restricted advice now represents a fifth of the market while the number of IFAs fell 9 per cent last year.
Apfa’s third annual adviser in numbers report found that there were 14,550 adviser firms registered with the Financial Conduct Authority at the end of last year. Around 77 per cent of advisers offered independent advice.
‘Focused advice’ also dropped to 2 per cent from 4 per cent the previous year, with ‘direct offer’ making up the final 1 per cent in 2014.
Consistent criticism of the new advice labels, which marked a departure from pre-RDR definitions in that advisers independent of provider influence could still be considered ‘restricted’, have led to the FCA pledging to review advice labels in the near future.
Using Financial Conduct Authority retail investment product sales data, Apfa also showed that the proportion of sales on a non-advised basis has grown over recent years.
Using figures for all firm types, it found that from a 60/40 split in favour of advised sales in 2011/12 the trend moved to 50/50 in 2012/13 and on to a 67 per cent non-advised and 33 per cent advised split in 2013/14.
Generally there are expectations that more business might be transacted without advice as a result of new pension freedoms, as advisers increasingly face demands from clients that wish to go against recommendations. The Apfa report showed that 72 per cent of adviser business in 2014 was related to pensions.
Chris Hannant, Apfa director general, stated that the trend in the rise in the proportion of product sales on a non-advised basis continued.
“As expected there has been an increase in fee-based income with retail investment products, which saw such income year-on-year increase by over 85 per cent.
“More worryingly for the future, the UK savings ratio fell, but the amount of funds held in stocks and shares Isas rose by almost 5 per cent.”
He added that the data suggests a stable market despite the challenging volume of regulatory change. “The obstacles to consumers accessing affordable advice remain such as the increasing cost of regulation.”
peter.walker@ft.com
