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FCA data suggests over 80% of advice firms are IFAs

Independent advisers account for 84 per cent of advice firms operating in the market, the latest FCA data suggests.

The figures were obtained by BBC Money Box’s Paul Lewis, and passed to Money Marketing. The full data will be published by the regulator later this year.

Based on regulatory returns data for 2016, a total of 4,672 firms, equating to 84 per cent, offer independent advice. A further 776 firms, or 14 per cent, offer restricted advice, while 129 firms, or 2 per cent, provide both types of advice.

This compares to 4,732 IFAs, 832 restricted advisers and 154 firms offering both services in 2015.

But looking at individual adviser figures, the numbers diverge. In 2016, 14,382 advisers said they offered independent advice, making up 43 per cent of the advice population. A total of 14,360 advice staff offered restricted advice, equating to 42 per cent, with 5,067 staff, or 15 per cent, offering both.

The FCA says the figures may include double counting, where individuals work for more than one firm, and changes to returns could affect the ability to compare the data in future. It declined to comment further.

Threesixty managing director Phil Young says the stated 84 per cent IFA figure belies the true picture.

He says: “Anecdotally, that sounds about right. But in reality, people are buying from individual advisers and the number of advisers tells a very different story. The more telling thing is the amount of business placed, and the majority of the money is going through restricted advisers.

“Bigger restricted firms will have more resources at their disposal, and will potentially be buying up client banks as well. The chances are that the person a client actually sits down and meets with will be a restricted adviser.”

EY senior adviser Malcolm Kerr says: “It’s remarkable that 84 per cent of firms are independent yet the adviser population is evenly balanced. The costs of researching the whole market must be less for firms with hundreds of advisers than for firms with two or three advisers.

“Of course, the small IFAs still have to cover the whole market, which in my experience is not always the case.”



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Bigger, smaller. Tesco sells more than Fortnum’s. Top Shop sells more than Savile Row. Big isn’t always beautiful as far as the customer is concerned.

  2. “Of course, the small IFAs still have to cover the whole market, which in my experience is not always the case.”

    Sounds like Trump.

  3. “The more telling thing is the amount of business placed, and the majority of the money is going through restricted advisers.”

    Maybe that’s because they operate a quasi commission business model so they have to recommend product to earn their wares?

  4. “Of course, the small IFAs still have to cover the whole market, which in my experience is not always the case.”
    sounds like someone who has never been an IFA was this guy not at Ernst & Young enough said about the real world

  5. Is there scope to shoehorn another SJP story in here…?

  6. I would wager that Malcolm Kerr hasn’t been to see many IFA firms and doesn’t understand how WOM works yet he has the ears of the powers that be, not a good thought.

  7. Blue Eyed Monster 16th March 2017 at 7:10 pm

    Well said Evan Owen.
    Most IFA practices will utilise research software for virtually all relevant products on the market. This research can be carried out in minutes, and levels the playing field for all small IFAs with the biggies.

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