Fidelity believes that the retail distribution review could squeeze out almost half of advice firms.
Fidelity surveyed 500 advisers firms and found that 44 per cent say they will become general financial advisers in the new regime.
But head of IFA business Peter Hicks says GFAs face the two-way threat of professional financial planners attracting most of the business of high-net-worth clients while bancassurers target lower earners.
Hicks says: “The risk for general financial planners is that they may simply be squeezed out of the market. Fee-based firms would be the natural selection of high-net-worth investors and the banks may well concentrate on the mass market. General practitioners could find themselves between a rock and a hard place.
“It would be a travesty for these advisers if they were forced out of business as a result of these changes.”
Capital Asset Management managing director Alan Smith says: “It is clear from the FSA’s agenda that they want to upscale financial advice to end up with a small but elite group of financial advisers that focus on fees and away from commission and that are highly qualified while the rest of the market will be dominated by banks and building societies.”