IFAs have hardened their stance against restricted status over the past year, as research pointed to a sharp drop in the number of advisers looking to relinquish their independence.
Findings from Harrison Spence’s latest ‘Adviser Views’ report, which surveyed 170 respondents in October, found just 2 per cent of independent financial advisers are looking to become restricted in the next 12 months.
This is a marked decrease from the 22 per cent of advisers who planned to adopt restricted status over the course of 2016.
According to Brian Spence, founding partner of Harrison Spence, some IFAs have been deterred after seeing the failures or shortcomings of larger deals where IFA firms have been bought by restricted acquirers.
But he also pointed out that those IFAs who planned to become restricted during 2016 might now already have done so.
According to the most recent research, not a single IFA planned to be restricted in the next two to five years; a marked fall from last year’s figure which found a third of IFAs believed they would move towards being restricted over that timeframe.
IFAs will come to realise that moving to restricted status is a way to potentially reduce costs and risks Brian SpenceWhile 16 per cent of IFAs were uncertain about whether to go restricted, two-thirds remain staunchly independent, stating they will never become restricted.
Mr Spence said: “There is a distinct hardening up of the ‘not at all’ camp who see a way forward in remaining independent, which has resulted in a firming up of their ideology and determination against restriction.
“While the reality is it is more onerous to be independent, it is possible to boost profitability and reduce risk without going down the restricted route.”
Meanwhile, Harrison Spence expects one-third of the market to be restricted within 12 months, up from around 15 per cent today.
The firm also predicted there will be a 50/50 split in the next three years as the ‘uncertains’ go down the restricted route.
Mr Spence added: “It is likely that IFAs will come to realise that moving from independent to restricted status is a way to potentially reduce costs and risks, and free up more time to spend with clients, without fundamentally changing the offering.”
