Regulation  

Survival of the biggest as tie-ups take effect

Dominic Rose, strategy and acquisition director at Quilter Private Client Advisers, explains that the outfit has a “target demographic of wealthy to high net worth clients”, and therefore scale is a vital factor.

Other companies have been following suit, with Fairstone among the more active: in early May, the firm announced it had made its second purchase of 2019, Brett & Randall Financial Services, adding 420 clients and beefing up its assets under management by an additional £200m in the process.

Mr Hanley says: “The consolidators are cash-rich at the moment and able to make increasingly attractive offers to an ageing population of small to medium-sized advisers. Many don’t necessarily want to sell or leave their clients and the industry, but are worried that if they don’t jump on the gravy train, it will puff out of town before they do.”

Mr Dyer, however, suggests activity, over the past 12 months, at least, has been far from unusual. “If you have a look at the data, there have been surprisingly few [deals]. Last year there were fewer than 100,” he says.

“The RDR accelerated the exit of firms that were not capable of operating in a professional environment. Until more recently, there hasn’t been the tremendous imperative to leave. Activity has been sporadic.”

But he adds that the recent acquisitions are certainly a sign of things to come, with 500 to 700 companies in total expected to leave over the next three years.

Some onlookers’ prime concern with this activity is that independence is being swapped for restricted advice. This is likely to be more relevant to larger outfits, as was the case with the acquisition activity of Standard Life’s advice arm 1825 in recent years. Yet firms of all sizes are now looking to grow their practices.

“We are finding a lot of retiring IFAs who want to ensure that their clients are retaining their independent status,” says Mr Chandan. His company is in the process of trying to purchase three companies, and only targets those with investment propositions and charging structures that he is happy with. But he explains that the process is far from straightforward.

“You need to kiss a few frogs first because you want a company that makes sense from an ethos and culture point of view,” he says.

Advising advisers

Intermediaries looking to sell generally fall into two categories: those looking to retire and therefore leave the industry, and those hoping to continue working as part of a larger business. For the latter, an important consideration to digest is how an adviser would feel no longer being at the top of their firm’s pile.