Ernst & Young says adviser numbers will drop to 20,000 this year, while life companies have experienced “slow” new business figures post-RDR.
The firm estimates there were around 23,000 advisers at the start of 2013 – a number which does not include the decision by HSBC and Santander to exit mass market advice earlier this year.
Ernst & Young EMEIA financial services partner Trevor Hatton expects this figure to drop substantially during 2013.
He says: “The past year or so has been particularly challenging for life companies, asset managers, platform providers and distributors.
“Anecdotal evidence suggests that, following an excellent Q4 2012, new business for many players during Q1 2013 has been slow.
“This is unsurprising given the fundamental change to market dynamics driven by the RDR and we expect to see a steady improvement as the year progresses and as consumers and advisers get to grips with the new environment.
“However, we remain of the view that adviser numbers will continue to fall for some time and we think our 2009 forecast of 20,000 by year end remains realistic.”
Evolve Financial Planning director Jason Witcombe says: “The RDR is a huge challenge for a lot of advisers, so I am not surprised people are considering exiting this year.
”I expect that to continue into the early part of 2014 as well.”
Hatton says the Treasury-appointed Sergeant Review of Simple Financial Products in February set out a range of simple policies it believes providers need to develop.
He says the review “throws down the gauntlet” to the insurance industry, adding: “Our immediate reaction is that it will take some time for these products to gain traction and that simple life cover, if launched, could gain share most quickly.”
In addition, Hatton expects the Financial Conduct Authority to be “more interventionist and intrusive” than the FSA, with a “significantly” increased use of thematic reviews and section 166 reports.