The managing director of Glasgow-based chartered financial planners Intelligent Capital said: “In the brand new world, where the bar is constantly rising, one- or two-man IFA teams will not have the same availability of resources.
“If you look at the unit cost, while IFAs do a great job, they will not be able to operate as economically.”
Mr Forbes said one- or two-man bands could benefit from joining smaller operations, where costs and know-how could be shared. This, he said, would ultimately allow an adviser to provide a better, more focused service. Intelligent Capital employs a full-time paraplanner, which allows their advisers to go out and do their work.
In five years’ time, he said, the market will be dominated by two types of firms – nationals and regionals.
He added: “The nationals will not have the same personal service, depth of interaction or long-term contact with clients. The regional players can impose a sense of loyalty with clients and advisers will tend to have a stake in the business.”
Steve Hagues, managing director of Retiring IFA, said: “There will be a very different landscape in the years ahead because of huge pressures – consolidation, capital adequacy and economics of scale. Then there is the soaring cost of personal indemnity cover, and having to justify to the FCA that you are an IFA means the pressures on sole traders are acute, so I believe there will be a move towards larger firms.”