An 18-page monthly Observatory update from research firm Matrix Solutions showed that the proportion of appointed representatives has slipped by 0.53 per cent from December 2012 to September 2013, while the number of directly authorised firms has dropped by 1.88 per cent.
|One Month: The overall number of CF30s increased by 125 (from 97,710 to 97,835) from August to September 2013|
The number of registered individuals decreased by 349, from 128,380 to 128,031, between July and August 2013.
Year to Date: The overall number of CF30s has decreased by 5,523 from December 2012 to September 2013, down from 103,358 to 97,835.
However, David Barnett, financial adviser at DPB Independent Financial Services, said firms may be surviving at the expense of their smaller clients who are now proving too expensive to service, or niche business that would be could be highly useful to existing clients.
Mr Barnett said: “I would be forced to turn away clients with small pension pots or an Isa worth £10,000, and that problem will only spread as RDR advances. To suggest that the same number of people will continue to receive advice now is utter nonsense.
“I accept that there were a lot of cowboys in the industry have been swept away by RDR, but the number of perfectly good advisers has been dramatically reduced in the last five to ten years, as expenses are getting greater and greater. I simply cannot go through the compliance procedure and make it economical for every last client.”
Mr Barnett predicted that many more casualties of RDR are yet to come in the form of older advisers who have decided that “enough is enough”.
He said: “I am 65 and I know advisers similar in age to me who have come to the end of the line, even though they are capable of dealing with clients for many years to come.”
He was responding to comments made by Keith Richards, chief executive of the Personal Finance Society, who said last week “nothing has fundamentally shifted” in terms of an increasing rate of orphaned advisers since RDR.
However, Mr Richards acknowledged that the advice gap has been growing over the past 20 years and is “logically” set to continue.
He added: “There has of course been some further impact on the growing advice gap following the exit of advisers in the lead up to RDR. However, the fact that over 1600 qualified advisers have re-entered the market since the start of the year is certainly more positive than predicted, as is the fact that we have not seen the post-RDR fall-out of advisers struggling with adviser charging which was also predicted.”
Mr Richards also said there is little evidence to suggest advisers have used “radical segmentation strategies”, adding: “Few advisers currently seem prepared to walk away from clients with advice needs and as individuals, rather than corporate entities, it is within their gift to decide who they deal with.”
However, Mr Barnett argued it was not always feasible for advisers to accommodate lower-value clients, as pro-bono work had been made “impossible” by complex compliance procedures for all work, no matter how small.