IFA  

More acquisitions expected as regulation bites

He added: "Private equity has been around for some time, I think the difference now is at one time it was only the very large businesses which were attracting their attention.

"But I think now we’re seeing that they are prepared to look at smaller opportunities which can, through acquisition, grow substantially and provide a really good return.

"There is a much broader interest in the space and alongside the traditional consolidators, some of which are private equity backed, we are seeing some interest from other potential sources - be it private equity, potentially fund managers or discretionary managers."

Earlier this month adviser consolidator Succession Wealth acquired six financial advice businesses, adding £800m in assets under management and bringing its total to more than £8bn.

Mark Stokes, group communications and public relations director at Succession, said securing £10bn assets under management by the end of 2019 was still a "very realistic objective" for the company.

Whilst Mr Stokes recognised demographics in the advice industry were a contributing factor towards the acquisitions drive, he said it was fairly rare principals of firms acquired by Succession would seek to retire immediately and instead pointed to the "increasing weight of regulation" as a major motivation for advisers looking to sell. 

He said: "I think regulation and the associated burden means a lot of IFAs find themselves spending 50 or 60 per cent of their time running their businesses now and not actually seeing clients, and I think that’s what most of us came into the industry to do."

Mr Stokes said larger players in the consolidation market now had "very good" firms from which to choose, confirming Succession has seen a "much higher" level of activity than since it started buying businesses. 

He added: "There is no shortage of quality businesses, but we make a point of not buying every one we are offered and each deal is assessed on its own merits. 

"We are thrilled that most of our principals are still with us. On fairly rare occasions someone wants to retire.

"We have a number of planners who will no doubt want to retire over the next couple of years which is why we’re quite keen on our graduate and fast-track programmes because they are brining some great talent through." 

Since the launch of its advisory business five years ago 55 companies have joined Succession, which recently abandoned its 'acquisition in reverse' model to buy advice firms and began to target larger companies with assets in excess of £100m. 

Mr Stokes added: "Most of the time, certainly recently, we are buying firms that want to expand and continue to grow and develop their business, and they are quite happy to do that with Succession."