Around 90 per cent of new clients are placed into ongoing advice arrangements. For the sector, ongoing advice is 80 per cent of all advice revenue, up from 60 per cent in 2016.
It is not uncommon for a business looking for a sale to go through a process of reducing its cost base to appear more attractive to investors.
These cost reductions will often impact operational and administrative areas and flow through into the effectiveness of customer service.
Rennison says: “Where the needs of clients are not front and centre of any transaction, they may not benefit from the change of ownership, especially in relation to their investment solutions if there is not a suitable range of choices. This may lead to what the FCA has previously referred to as 'shoehorning'.”
McCullam says that as firms consolidate, they will also look to gain efficiencies through their scale, resulting in a narrowing of proposition reducing consumer choice or the withdrawal of services from customer cohorts that are no longer seen as viable.
He adds: “An individual practice will naturally have a closer knowledge of its client cohort often based on the approach or personality of the advisers leading it. With consolidation and a more standard model to support a wide array of clients, comes a reduction in client centricity.
“Advice is ultimately a confidence game and if customers do not trust or have faith in their adviser, they are not going to transact, and they will exit the relationship."
Ima Jackson-Obot is deputy features editor of FT Adviser
