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Change in focus after fall in adviser numbers – Equifax

Analysis of internal data held by intermediary intelligence provider Equifax Touchstone revealed that 5000 advisers deregistered during the final quarter of 2012, followed by a further 2000 in the first quarter of 2013.

Neil Cunningham, general manager of Equifax Touchstone , said the reduction in adviser numbers suggested a change of focus in the type of advised products offered to clients and a “continuing impact of RDR”.

He added: “The reduction in intermediaries, who are essentially the distribution channel for many investment products, means it is crucial for providers to understand the profile of those remaining to ensure they can deliver sales for long-term growth and market share objectives.”

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The firm’s analysis also identified a shift to higher-value products by advisers with Sipps accounting for 60 per cent of all pension products sold during the first quarter of 2013.

Mr Cunningham said: “Advisers are adjusting their offering to concentrate on higher net-worth clients more likely to be willing to pay fees. In such a changing intermediary landscape it is vital providers know their intermediaries and how they are performing in their local market.”

Background
Data released by the Association of Professional Financial Advisers this month revealed a fall in the number of advisers from 41,000 in December 2011 to 31,000 in December 2012. The number working for financial advice firms fell from 26,000 in 2011 to 20,000 in December 2012.

Provider View

Equifax Touchstone’s analysis came after Standard Life estimated a 20 per cent shortfall in “quality financial advisers” to match the demand for advice required by the baby-boomer generation.

Drawing on Office for National Statistics figures which revealed that 3.8m people aged 55 and over had more than £100,000 to invest, Eddy Reynolds, head of adviser and investment propositions for Standard Life said: “Advisers are likely to be actively servicing on average up to 150 clients each post-RDR.

“Given there are around 20,000 advisers in the UK, the outcome is a shortage of around 5000 advisers to meet the potential advice demand.

“The focus of comment to date has been on the ‘advice’ gap, but we believe there is also an ‘adviser’ gap to service higher net-worths.”

Adviser View

Peter Davies, founder of Cardiff-based advisory firm Create Wealth, said: “We are seeing more quality clients, people with larger sums of money and more complex needs who can’t do it themselves and might have gone to their bank in the past.”