In research published by Openwork today (May 28) the advice network warned the demand for financial advice is "not being met", with just 15 per cent of adults regularly meeting a financial adviser but a further 56 per cent believing they would benefit from advice.
In a survey of 1,014 adults the network found demand for advice rose to 71 per cent among under-35s, but cautioned the number of advisers would need to "grow rapidly" to meet that demand.
Openwork attributed the growing demand for advice to the launch of pension freedoms, an upward trajectory in the number of people starting pensions and issues with affording homes.
But a growing prospective client base could be met by dwindling supply of advice, as more advisers are predicted to sell their businesses amid an increasingly challenging regulatory environment and unabating pressure on costs.
Wealth management firm Succession Wealth today predicted the number of IFAs and wealth managers in the UK could fall by 7 per cent by 2022, with research suggesting stringent regulations would serve as the main catalyst for the shift.
In a survey of 45 wealth managers and IFAs between March and April this year, 51 per cent said the regulatory environment was a "very important" factor for businesses wanting to sell up and 36 per cent cited a growing pressure on costs as a significant driver.
The increasing investment which is now needed to operate in such a "heavily regulated infrastructure" was citied by 34 per cent of respondents as a key reason for advice firms wanting to exit the market.
At the beginning of this year the Heath Report Three warned the delayed impact of the Retail Distribution Review could see one in five financial advisers leave the industry through planned retirement in the next five years.
The report found 5 per cent of advisers, a total of 1,650, had immediate plans to retire and another 16 per cent, a total of 5,280 advisers, hoped to retire in the next five years.
Mike Lacey, partner at Berkshire-based financial adviser firm Bowman Pension Consulting, said: "Of course the number of advisers will fall, and continue to fall.
"The FSA [Financial Services Authority] set increasingly high regulatory burdens, MPs can’t see a problem with banning contingent charging and the Financial Ombudsman Service is finding for clients for advice given over a quarter of a century ago.
"We have no long stop for advice and so carry a, literally, lifelong liability for it.
"I love giving financial advice, but the burdens involved – particularly for a relatively small practice like Bowman – are significant. Too much time spent on prophylaxis, not enough time available for advice."
Last week research from platform Nucleus found the number of advisers spending 40 per cent of their time on administrative tasks has tripled in a year.
Nucleus also found advisers were struggling to find enough time to service increasing client numbers, saying only one in seven advisers spent more than 40 per cent of their time with clients, down from one in five last year.
Mr Lacey said the "real worry" was with a reducing cohort of advisers, the number of people able to get advice will be affected.
He added: "The number of advisers is limited and falling, and as the population [continues] to age, the numbers requiring advice – particularly in the pensions freedoms arena – is rising.
"An increasing cohort will remain unadvised, or have to rely on less than full advice, and the unadvised public will be worse off."
rachel.addison@ft.com
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