The adviser industry could be decimated by the costs of regulation and compliance, Jo Gilbey, marketing director for financial services software firm Intelliflo, has warned.
She said that up to 12 per cent of advisers have said they would leave the industry because regulatory and compliance reporting were taking up too much time and getting too expensive.
Already there has been some reduction after RDR, which came into force on 1 January 2013. According to Imas Corporate Finance, there were 38,789 directly-authorised advisers in August 2009, but by August 2014 this had dropped to 33,575.
Ms Gilbey’s predicts a further reduction of 4,029, to 29,546. If she is correct, this figure could drop to 18,707 as a result of post-RDR pressures.
However, David Thomson, director of policy and public affairs for the Chartered Insurance Institute, said that the industry could begin to grow because of pension reform, auto-enrolment and other factors lifting demand.
He said: “I think the number of advisers will start to rise. We need an influx of new recruits, but that is difficult for a small firm – it is a huge risk to train someone up.”
Mike O’Brien, managing director of TenetConnect and TenetSelect for the Tenet Group, said: “Some people have found it hard going in the post-RDR universe, and it was a good time to exit. There were also people willing to acquire businesses and a decent amount of consolidation.”
But he is optimistic for the future of the advice industry, saying: “There is a real boost coming along to the adviser sector with the pensions reforms.”
Adviser view
Carl Lamb, managing director of Norwich-based Almary Green, said: “The radical changes we have seen in the financial services industry have meant that many firms have struggled with increased costs and regulation.
“I am a strong supporter of increased transparency in our industry, and although it increases the levels of administration, it is without doubt for the benefit of all.”
