If an IFA is still getting a significant part of its income from this so-called trail commission as April approaches, they could be in difficulty.
“In April next year, I expect there is going to be a considerable group of IFA’s that will effectively become distressed sellers,” said Garry Heath, director general of Libertatem, a trade association for financial advisers.
“As we get towards the trail deadline, you will have post-RDR good quality businesses probably going for very good prices, and that may increase whatever happens.
“Down below there may be other companies that have been impacted by the loss of trail basically selling at bargain basement prices.”
Paul Beard, founder and executive chairman of Alexander Beard, which completed two acquisitions of IFAs last year, believes that the RDR has been a double-edged sword for the industry.
“The RDR has helped IFA businesses become more valuable because fee-based recurring income is more attractive,” he said.
“Equally, the investment needed in technology, together with increased regulatory fees and increased costs of compliance, will make it harder for smaller firms. There are two sides to the coin.”
