Independent advice firms are hugely worried by the high volume of M&A deals within the UK sector.
According to research by boutique investment consultancy Albemarle Street Partners, 73.5% of advisers believe consolidation has not been positive for clients.
Nearly six in 10 (59.1%) think the main drawback of a more consolidated sector is a “weaker focus on the best interest of clients”, while 28.5% said it would lead to “less individualised financial advice”.
On the flip side, 36.7% believe that greater consolidation would make the industry easier to regulate and monitor, as regulatory pressure was the biggest issue cited by advice firms.
Of the 49 advisers polled – over 70% of whom are business owners – the vast majority (84%) said they had received at least one approach to sell either their firm or book of business in the past year.
Manifesto
As financial advisers continue to struggle with regulatory and business pressures to remain afloat, Albemarle has rolled out the ‘Coalition of the Independent’, a five-step manifesto looking to address the problems faced by IFAs when it comes to succession planning, recruitment, regulation and fees.
The steps are:
- Action on the cost of borrowing;
- Increasing education and awareness of advice as a profession;
- Creation of an independent academy;
- Addressing the cost of compliance; and
- Encouraging light-touch regulation.
Charlie Parker, managing director of Albemarle Street Partners, said: “There is no denying that the independent advice market is highly fragmented, with more than 26,000 FCA-registered advisers in 2019.
“While it may be easier for the regulator to police a smaller number of larger firms, the cannibalisation of the sector leaves clients with less choice and at the mercy of homogenous financial plans and high fees.
“By coming together with one voice and pushing for change, advisers can shape the future of their profession. We aim here with the Coalition of the Independent research to fuel the debate as we continue to work with our adviser partners to find ways to support their independence and grow their businesses.”
