Ranks of IFAs have swollen by 10% since RDR – FCA data

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Ranks of IFAs have swollen by 10% since RDR – FCA data

The number of financial advisers operating in the UK has seen a steady rise in the past year, FCA figures have shown.

Following a freedom of information request, FCA data released on 10 November show a 5 per cent increase year-on-year from 21,496 to 22,557 IFAs operating across 4,504 firms – and a 10 per cent increase since the introduction of the RDR on 31 December, 2012, when the number stood at 20,453.

The regulator emphasised that the figures were based on returns firms had submitted, hence it was dependent on the firms updating the information.

“We are planning on consulting to bring this data request within the retail mediation activities return, which we believe will lessen the potential for any weaknesses in the data,” a spokesman said.

The number of advisers at banks and building societies also increased year-on-year, from 3,182 to 3,672, representing a 15 per cent increase and reversing a decline since the introduction of RDR.

There was a 14 per cent rise in the number of advisers at discretionary investment managers, from 1,698 to 1,944.

However, there was a fall in the total number of individual retail financial investment advisers, from 31,153 to 30,600.

The figures from the FCA contradict other figures from the industry which showed a decline in the number of advisers since the implementation of RDR on 1 January 2013. According to Garry Heath, author of the 34-page paper, The Heath Report Two, since the announcement of the RDR 13,500 advisers have already been lost.

Mr Heath has claimed that, because each adviser was likely to use an administrator, a potential loss of a total of 29,010 advisers following a trail ban could equate to 58,020 job losses overall.

He said: “Historically, 23m consumers have accessed advice through IFAs and banks. Since RDR was announced, 16.5m consumers no longer have that access.”

Mr Heath has also warned that the end of trail commission in April 2016 could cause between 7,620 and 15,510 advisers to exit the industry.

Adviser View

Richard Freeman, outgoing chief executive of Intrinsic, said: “It is pleasing to note that the ranks of financial advisers in the UK are swelling. This means there is one adviser for about every 2,300 UK adults.

“In comparison, there are approximately 150,000 legal professionals and 330,000 members of accountancy bodies, and even this 5 per cent increase in adviser numbers leaves us woefully short, especially considering the amount of change in personal finance in the last two years. While very welcome, this increase will do little to close the advice gap.”

Reaction Round-up

The FCA has set out its frame of reference for its market study into competition in the asset management industry, announced in its 2015/16 business plan. This followed feedback received as part of the wholesale sector competition review in 2014, which indicated there might be competition issues in asset management.

Trade Body: Guy Sears, interim chief executive of the Investment Association, said: “The investment management industry is a critical conduit for savings to flow productively into the economy, and a highly important export sector. We agree it is essential the whole investment chain functions effectively for its clients.”

Campaign Group: Catherine Howarth, chief executive of campaign group ShareAction, said: “When considering “value for money”, savers have an interest not only in financial returns, but also in investment decisions that do not jeopardise the world in which they live and into which they will retire. Asset managers should compete, and be held to account, on the impact their decisions have on the environment, society and the wider economy. We hope the FCA will keep this in mind.”

Legal View: Jenny Block, competition partner at international law firm Pinsent Masons, said: “There are a number of familiar themes in terms of questions around the management of conflicts of interest and delivery of value, and clearly some overlap between the FCA’s latest study and other areas that are under regulatory scrutiny at present.”