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Speaking at the Marketforce and IEA's fourth annual conference in London last week, titled the Future of Distribution in Financial Services, Mr Middleton said the advisory industry would be made up of larger national, regional and specialist firms in the future similar to the accountancy and legal sector.

He said: "We are already seeing people being set up as consolidators. There will be consolidation from thousands now to much more structured businesses realising the complexity of giving advice.

"Firms are wondering how they can meet the challenge of becomimg retail distribution review-compliant and are looking to form new businesses in order move into the new wealth advice arena."

Mr Middleton said the qualifications under the proposals and need for better advice has "busted" the IFA brand and made it necessary to create bigger wealth advice companies that can easily understand the new regulations.

He said the IFA brand cannot offer all types of advice and relies too heavily on revenue from the product provider.

He said: "We do not use the phrase IFA at all. A new world of professionally qualified people will move into a new industry of wealth advice, where we have larger capitalised firms of wealth advisers."

However, Richard Howells, UK intermediary sales director for Zurich, who still owns his own IFA business, told the same meeting that people still value the IFA brand and while some would struggle, ultimately it could still grow.

Edward Stuart Brown, sales director for Friends Provident, said that IFAs would have to get better at explaining what they can do for clients and start preparing the fee-based model immediately.

Jason Witcombe, director of London-based Evolve Financial Planning, said: "I completely disagree that the IFA brand is bust and also disagree that big is better.

"A lot of IFA firms are one-man bands and they are lifestyle-type businesses, the owners have no intention of being a bigger business, they are happier ticking over as they are. I would not want to force them to consolidate if they did not want to."

However, Mr Witcombe said he agreed that smaller firms who want to grow as businesses rather than stay as one-man bands should look at joining forces or sharing ideas with other firms and benefiting from economies of scale.