The number of approved persons at networks has fallen significantly, with a “clear downward trend emerging”, data from Imas Corporate Finance has shown.
Figures from the independent merger and acquisition provider showed that, at the peak of network membership in September 2009, there were 15,604 appointed representatives.
Since then, figures have nose-dived, with a significant trough in 2012, dipping to 12,474, largely the result of Honister network going under, and a massive drop in January 2013, marking the implementation of RDR, when figures fell to 12,194.
From peak to nadir, the networks lost 2870 appointed reps, and the figure has barely recovered, with just 12,319 ARs as at the end of April this year.
However this does not mean a depletion in the numbers of advisers. Olly Laughton-Scott, founding partner for Imas, said: “We have seen a pick-up in FCA approved persons over the course of 2013 to 2014. Some advisers may have left the industry but others may well be going direct.”
In January 2013, Imas recorded 19,687 advisers approved to give investment advice; at the end of April 2014, this had risen to 20,526.
He added: “What we have seen post-RDR, is the networks coming under different pressures. The actions of one party triggers a response; for example, if one sells or consolidates, this behaviour may influence others.
“You can see the decrease in members at networks, which is putting great pressure on them and there may be more consolidation and mergers as a result.”
The networks and large nationals have gone through a turbulent time over the past few years.
In May to June 2012, the Honister network crumbled, leaving more than 900 ARs without a home. Some joined other networks or nationals, while others, such as Mel Kenny, director of London-based Radcliffe & Newlands, went directly authorised.
Last year, Aegon UK sold Positive Solutions to Intrinsic, which was then bought by Old Mutual Global Investors.
In early 2013, Sesame Bankhall Group’s business was put under review, with the understanding that it might be sold by parent company Friends Life.
In June that year, the FCA fined SBG £6m for systems and controls failures, and then in November, SBG confirmed it would move to a restricted model of financial advice, which saw some financial advisers opt to leave and become directly authorised.
At the time, Steve Thomas, chartered financial planner for Surrey-based IFA The Eurofinance Partnership, said he had “no choice” but to leave SBG to go directly authorised with help from Bankhall, while David Pritchard, managing director of Cheshire-based advisory firm Applewood, said the firm’s departure from the SBG network allowed it to have more control over its “destiny”.
Mel Kenny, director of London-based Radcliffe & Newlands, said: “Quite simply, it represents the distrust of networks. There are new stories coming out of past failures, and current problems with networks. It is most definitely there are more advisers fed up of networks. However, it can be a double-edged sword.