He attributed this to the Financial Services Compensation Scheme levy.
Profits before tax in the advice sector were down £100m to £835m last year, while retained profits were down by a similar amount - £110m - to £61m.
Mr Hannant said: “This shows how unsustainable the current system is, with the FSCS levies severely undermining the capacity to generate funds to invest in the future.
“Only when advice firms’ business models are sustainable and profitable will they be encouraged to enter the market and innovate to help close the advice gap.”
Meanwhile, turnover continued its steady increase by 8 per cent in 2015.
Back in September, Hargreaves Lansdown reported pre-tax profits for the year to the end of June fell by 5 per cent to £199m and the Financial Services Compensation Scheme fee leapt to £4.4m compared with £0.8m in 2014.
Last month St James’s Place reported the profit before shareholder tax was down from £182.9m in 2014 to £151.3m for 2015.
St James’s Place’s FSCS levy for the year was £20.1m, or £15.9m post tax, an increase of £14.2m compared to the prior year charge of £5.9m.
The Financial Conduct Authority has said that during this year it will review the fairness of the FSCS levy for advisers.
In January the FSCS levy for 2016 to 2017 was announced to be £72.7m, down slightly on 2015 to 2016.
According to Apfa’s figures, 15 per cent of advisers’ income comes from pre-RDR investment business. This compares to 35 per cent from post-Retail Distribution Review ongoing adviser fees and 33 per cent on post-RDR initial adviser charges.
“Advisers need to ask themselves if they really need posh city centre offices and Range Rovers, because clients are unwilling to fund them.”Simon Linstead, managing director at Nurture Financial Planning, said he saw massive increases in the levy, professional indemnity insurance and Financial Conduct Authority fee last year.
He said: “Whilst we have managed to meet these unprecedented costs within the business so far (with a large drop in both pre-tax and post-tax profits) if they continue to rise this year, we will have no choice but to pass these on to our clients.
“This is the last thing we want to do and I do feel that this will cause a further widening of the advice gap.”
Phil Billingham, a Chartered financial planner and operations director at Perceptive Financial Planning, agreed with the main cause of reduction in profits.
He said: “It does indicate that the scale of regulatory costs we have seen are not trivial and there is no ability within advisory firms to pay these – or heaven forbid, higher – levels of levy without impacting on their capacity to look after clients and recruit and train staff.
“It is good to see that despite the ‘we’re all doomed’ stories, independent advice continues to dominate the market; that is without doubt best for consumers,” he added.
Matthew Harris, IFA and owner of Dalbeath Financial Planning, said he did not recognise the analysis of a sector suffering from an unavoidable chronic lack of profitability.
“If firms can’t turn demand into a profitable business model then I suspect they have hung on to high overheads and other costs that were sustainable under the pre-RDR paradise of large, disguised commission payments, but which don’t make sense anymore.
“Advisers need to ask themselves if they really need posh city centre offices and Range Rovers, because clients are unwilling to fund them.”
