Increased regulation and rising costs have led to advice market consolidation “stepping up in pace”, according to Continuum boss.
Last month, the Financial Conduct Authority published the latest retail mediation activities return (RMAR) data, which revealed that there were only 41 firms with more than 50 advisers in 2021.
Commenting on the data, Continuum managing partner, Martin Brown said the firm has seen an increased interest from advisers in its partnership programme as a result of these conditions.
“The costs of running an advice business continue to rise and we have seen a marked increase in the number of high-quality advisers approaching Continuum over the past year looking to join our partnership to help them with both the financial and time constraints caused by the effects of increased regulation in recent years,” he said.
The figures showed that the number of firms with over 50 advisers rose 17 per cent from 35 firms in 2020, as consolidation within the financial advice market continued to narrow the number of smaller firms.
Over 2021, there was a 4 per cent fall in the number of firms with five advisers or less to 4,396 across the UK.
However, despite the fall in the number of smaller firms, the number of financial adviser posts remained stagnant at 36,674.
Independent advice firms also accounted for a higher percentage of revenues earned from adviser charges across all firms than in 2020.
For all firms, those providing independent advice accounted for 63 per cent of revenue earned from adviser charges, meanwhile those providing restricted advice accounted for 37 per cent. Independent advice saw a rise of 2 per cent, up from 61 per cent in 2020.
Brown said the statistics show not just a pick up in consolidation, but that “independent financial advice continues to be the way forward for advisers looking to provide the best service to their clients".
Speaking to FTAdviser last month, Ascot Lloyd chief executive, Nigel Stockton echoed this, but said the small IFA is not dead, yet.
Stockton also highlighted the burden faced by small and medium sized firms and said that they will find it increasingly difficult to operate in the future because they would find it hard to keep up with “fast evolving and expensive technology”.
"It's going to take an awful long time for the death of the [small] IFA because you've got recurring revenue," he said.
Earlier this month, Continuum was bought by financial giant M&G.
Speaking about the move, Brown said: “We have been approached by a wide range of firms over the past two years but none of them were the right fit for a potential partnership. Our key priority throughout all discussions was to partner with a business that could support our strong belief we can become a household brand.”
In April, it reported assets under influence rose a further 20 per cent in the first quarter of the year.