Of IFAs looking to sell their business, only 4% look favourably on a consolidator as a suitable berth for their practice, researchers for the platform found.
The numbers looking to sell were stable, with 35% eyeing the option in the next five years.
Just under a third (30%) say they have no plans to sell, while 42% are looking to buy.
Stories
Barry Neilson, chief customer officer at Nucleus, said advisers had been put off consolidators “by some of the stories”.
“Many are discovering that a sale to a like-minded firm is the most likely way to ensure a consistent experience for clients,” he said.
“Some advisers may fear that the years of trust and loyalty built with these clients could be eroded quickly by a sale to a large consolidator.
“By having a properly planned and professionally executed sale or transition, it’s entirely possible for advisers to realise their succession plan and come away satisfied that they found the best balance possible and that their loyal clients are in safe hands.”
The last time the UK regulator reviewed consolidators in 2017 it found some good practices but not enough focus on the impact on clients.
Preconceptions
In its latest results, UK consolidator firm AFH said its “pipeline remains strong” but a spokesman acknowledged there were preconceptions about joining a consolidator.
“We aren’t going to stop explaining to people the advantages of coming to join AFH,” he told International Adviser.
“Sometimes people make a judgement based on a preconception and rumours. I would say don’t take other people’s word for it. Come talk to us, find out for yourself, and make your own mind up.”
He added that a successful acquisition was a meeting of minds and firms had to share AFH’s focus clients’ and their best interests.
Acquirer Fairstone was not able to respond directly to Nucleus’ findings but it expects to absorb nine firms this year.
Commenting on its latest acquisition in April, chief executive Lee Hartley said many advisers with Fairstone had enjoyed “very significant levels of organic growth” and “received a higher valuation for their business on final acquisition than expected”.
The annual adviser attitudes survey by Nucleus canvassed 200 advisers.
