Restricted advice status will be the inevitable result of market evolution, Keith Richards has claimed.
The chief executive of trade body the Personal Finance Society (PFS) said it was clear the advice industry seems to be heading towards a primarily restricted model.
“The exact split between independent and restricted advisers is currently not captured but assumed to be 50/50 and moving increasingly towards a restricted population.”
Latest statistics from the PFS showed there were 30,600 members, based on the total number of statements of professional standing (SPS), as at November 2015. Excluding the banking, stockbroking and other institutions population, this meant just slightly more than 22,500 were intermediaries.
According to the PFS data, this represents more than 80 per cent of the total intermediated advice profession.
Mr Richards said: “It is currently creeping towards restricted, driven by a number of factors, including consolidation.”
Already many nationals and networks are operating fully restricted or hybrid models. For example, Sandringham Financial Partners is 100 per cent restricted, while Openwork operates a restricted distribution network.
However, the majority of firms which have service contracts with support services provider Bankhall are independent advisory firms, while Tenet’s membership is still mostly independent.
Gill Davidson, group regulatory director for Tenet, confirmed: “The majority of our membership is independent or operating a hybrid of independent and restricted advice, depending on its customer segmentation model.”
Tim Sargisson, chief executive of Sandringham, comments: “Compliance costs and the regulatory burden could be the tipping point and this has certainly been the rationale used by some advisory bosses justifying their decision to join restricted networks.
“There will always be a group of high quality, independent advisers running profitable businesses, but consolidation - and with it the promise of greater numbers of restricted advisers - will surely come.”
To find out more about restricted and independent status changes, click here to read our latest guide, which qualifies for 60 minutes’ worth of structured CPD.