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First official RDR stats: adviser numbers down 20%, bank advisers fall 44%

FSA Letters 480

The number of IFAs and tied advisers operating on the first day of the RDR was 20 per cent down on December 2011 figures while the number of bank advisers fell 44 per cent.

The first comprehensive FSA figures on post-RDR adviser numbers are based on professional standards data submitted by firms and show the total number of retail investment advisers fell 23 per cent from the 40,566 estimated by the FSA at the end of 2011 to 31,132 at the end of 2012, the first day of the RDR.

The total number of advisers after the RDR deadline was also down 13 per cent from the 35,899 advisers the FSA estimated were operating in summer 2012. Of the post-RDR total, 30,045 were fully qualified retail investment advisers and 965 were part qualified, including those who have until 30 June to become RDR compliant.

FSA estimates suggest there were 25,616 IFAs, tied and multi-tied advisers in December 2011, of which 21,696 were IFAs. This fell 20 per cent to an equivalent 20,453 advisers after the RDR deadline. The FSA is unable to give a split for IFAs.

The number of bank and building society advisers fell by 44 per cent from an estim-ated 8,658 in 2011 to 4,809 post-RDR. Advisers with wealth management firms, including discretionary, non-discretionary and stockbroker firms, fell by 8 per cent from 4,043 to 3,718. Of these, 1,435 work for discretionary fund management firms.

The rest of the adviser population was made up of various types of advisers including those with life insurers, mortgage brokerages and corporate finance firms.

An FSA spokeswoman says the regulator’s estimates for 2011 adviser numbers may include some double counting.

FSA head of investment intermediaries Linda Woodall says: “This is the first time definitive information about the number of advisers has been published. Those who remain in the industry have shown they are committed to increasing the professionalism of the sector.”

In November 2010, then-FSA chief executive Hector Sants told the Treasury select committee a 20 per cent loss of advisers would be an acceptable consequence of the RDR but later apologised for his comment.

Plan Money director Peter Chadborn says: “The fall in bank advisers has proved a lot of us wrong who thought the RDR was going to play into the hands of the banks.”

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There are 32 comments at the moment, we would love to hear your opinion too.

  1. RDR has forced many advisers out of banks and on to the unemployment queue. Where do the FSA expect the new generation of advisers to come from as historically this was banks. RDR is cutting off advice for Joe Public who will now leave themselves unplanned for retirement and in some cases protection.

  2. The truth is out Financial advice is being decimated by a non elected quango. Mr and Mrs average will be totally without advice by end of 2013 as more and more advisers leave the industry. The job losses that the FSA have created is a disgrace even though their jobs are safe

  3. Roman Duzinkewycz 27th March 2013 at 10:11 am

    Well done Sants – how is the new knighthood sitting then? You must be so proud of yourself.

  4. Irate Financial Adviser 27th March 2013 at 10:23 am

    Once again the FSA prove themselves totally incompetent in their ability to forceast ANYTHING. They got the costs of RDR spectacularly wrong and also the number of advisers who will be forced out due to RDR. If George Osborne has any balls at all he would do the same thing to regulator as Mrs May has done to the border agency. Scrap it and replace it with relevantly qualified staff who will work with the industry to try to undo the total mess that has been caused and eventuall bring some life, and brilliance back to a once great industry. It make me wann puke

  5. This is good news for the industry, the advisers who are still authorised are the quality end of the market.

    If we can push the qualification thresh hold higher, and prove that we are a profession, then we can attrack the right type of people into our industry.

  6. I dont think these figures will surprise any of us actually on the front line doing the job. Numbers giving advice are down, costs spiralling up and where is poor old joe public?? Hardly better off as far as I can see. Sadly my fees have had to go up and we are doing less ‘free’ consulatation work for the less well off. Far too many risks.

    On the good side through less advisers mean more clients as the baby boomers still need help and I have yet to see a web based system that does half the job of an IFA.

  7. This is hardly a surprise, isn’t it what advisers had said would happen all along? The FSA got their numbers wrong…. shocker!

  8. An FSA spokeswoman says the regulator’s estimates for 2011 adviser numbers may include some double counting
    Can you imagine the grief an IFA would get if he said to the FSA, the above statement in connection with their figures.
    Any way the remaining IFA’s will now need to pick up the bill for the lost revenue to the FSA or will the FCA reduce their numbers to match the reduction of Advisers.

  9. The shift towards Financial DIY is the real legacy of RDR. In 2012 increasing charges pushed more financially active people to dispense with having a main financial adviser.At the same time growing numbers of people have DC pension pots that are at risk of being misapproriated because there are fewer advisers willing/able or around to provide professional financial advice.

  10. FSA head of investment intermediaries Linda Woodall says: “This is the first time definitive information about the number of advisers has been published. Those who remain in the industry have shown they are committed to increasing the professionalism of the sector.”

    How much did they pay someone in PR to come up with this soundbite?

    It’s like something from Orwell’s Nineteen Eighty-Four. Indeed the description on wikipedia could be used to describe the FSA.

  11. In reply to the earlier poster and his view that standards need to be raised further-perhaps you need to learn to spell first “attrack” before being so sanctimonious.
    I do hope that on that pedestal of yours you always get everything 100% correct in your advice.
    Standards eh?

  12. Banks must be laughing out loud and jumping for joy. Now they can peddle their wares online and through branches, without the need to provide advice, saving them a fortune in fines and advisors. DIY Investors beware!

  13. Sants apologised for saying a 20% reduction was acceptable. “I try to be a mild mannered individual” was his assertion.
    “Fish in a barrel” is mine
    There are many examples from history of “mild mannered” madmen causing mayhem and madness, I am too mild mannered to mention any names.
    Anon @ 10.23 you are possibly as “mild mannered” as Sants.
    It is a cut throat attitude like yours that gives advisers a bad name. If this is all the compassion you can muster for your peers, how do you treat clients?
    As for Woodall, anon@10.43 described her soundbite accurately.
    Keep an eye on today’s news. Abu Qatada has more rights than advisers.

  14. Well the Tories wanted to lessen the UK reliance on financial services. Looked like they did it by wiping out the advice industry for the working and middle classes. This combined with anecdotal evidence that IFAs have increased their charges.

    The final evidence that RDR has has been a complete disaster for those seeking financial advice. Who gained ? The CII and IFS who have made hay on outrageous exam fees gravy train.

    All that was required was proper policing of existing advice, particulalrly by banks and open declaration of fees/status so that the public could shop around in a free market.

    A scandal overall.

  15. re Anon: 10.23. Just better qualified crooks !

    You can’t teach ethics. I work in an IFA and can assure you from what I have seen that the qualifications did not have the desired effect. They just BS their clients with more jargon. I have decided to leave the industry despite being QCF4.

  16. Anon @ 10.23
    thresh hold? attrack?
    Quality indeed.

  17. I for one am worried that as the body in charge of an industry that requires people to be authorised the FSA are unable to do better than guess how many people work in said industry. Unbelievable.

    Under normal circumstances any person or company who finds their competition cut by 20% or more would be jumping for joy with the thought of all the extra customers coming their way. Unfortunately this is not the case in the world of financial services. My guess is that the people who have left usually dealt with the average Joe in the street and not HNW clients meaning that average Joe is left without an option for advice due to the levying of charges on advice.

    My humble opinion only as usual.

  18. In the Vietnam war, an un-named General was reported as saying

    “In order to save the village, we had to destroy it.”

    I realise this may be an apocryphal story but it feels like something FSA – and Mr Sants in particular – might say about the industry I remain proud to be part of.

    Whilst it’s easy for me to say as a salaried compliance manager, I would urge all advisers to stick with it – your customers need you and the country needs you.

  19. Crocodile tears with a hint of hypocrisy?

    Those posting woe and thrice woe are presumably survivors and as such presumably now have slightly less competition, which in turn may mean that they have the opportunity to increase business volumes. No doubt this will elicit howls of denial.

  20. Well, now we have it, a “Social and Financial Divide”
    All the previous commentators have made constructive points and opinion.
    As regards those wishing to trumpet about their latest level 4 status, let them consider, this is possibly just the begining of the new age of qualifications upon qualifications…there will surely be many more come..

  21. On occasion I look at these websites, with the faint hope that there may be some good articles on advice, tax, talking to clients, running businesses. But no, its always about something from the FSA website, or about something someone at the FSA has said, or how much it costs, or how many people it employs. Its amazing the pure obsession many of you have with the regulator and the smallest of things it does. If we moved on and focused on the things that mattered, we may be able to collectively improve this industry…

  22. The drop in bank adviser numbers is no doubt a direct result of RDR. However, I would be interested to establish the average age of the IFA’s that have left the industry to ascertain how much is attributed to retirees. When I joined the industry 16 years ago the average age of an IFA was in their mid 50s, which would mean a hell of a lot of IFAs retiring between 2010 and 2015 anyway.

    Having said that, if the FSA aren’t even sure of the numbers of advisers, I’m pretty sure they won’t know the average age!

  23. James Hurdman | 27 Mar 2013 1:25 pm

    The fall in IFA number may be down to those retiring – but ignores the fact that they aren’t being replaced by new blood.

    And no wonder – who would start up a business where you have no idea what you future running costs will be and where you have stump up levies to cover the past actions of others and have potential liability up to your grave. Ignoring the constant bad press that fails to differentiate between the different parts of financial services and calls people financial advisers in fraud cases when they have been authorised in their lives.

  24. 4,809 post-RDR banking advisers up until the end of 2012. Yes, but that figure will no doubt still include the 600-800 still at Santander awaiting redundancy.
    I can’t believe that there are still 4000 given that everyone has pretty much pulled out. Does it include also the solely protection advisers at Lloyds/Halifax?

  25. With fees rising by a proposed 30% on a reduced number of IFA’s, will I am sure reduce the figures even more.

  26. I think the assumption some are making that those who are now left in the industry are somehow better than those who have left is unjustifiable.

    Time will tell if there are less cases of poor advice and bad practice in years to come, though how much of that will be due to less advice being given by fewer advisers and less seeking advice will also be interesting.

    For me there seems little doubt more people need good advice than ever before and now we know there are less people to give it.

    Is that really considered a success story?

  27. steve murgatroyd 28th March 2013 at 11:02 am

    Nice one FSA, ask yourselves have you got this right? No, I didn’t think so completely wrong. What you going to do about it then?

  28. RegulatorSaurusRex 29th March 2013 at 4:04 pm

    How many regulators have left the industry?

  29. The fact is that pre-RDR the qualifications a lot of IFAs held were completely redundant and the level of ethical practise within our industry often fell short. Something needed to be done and RDR is a form of very rapid “natural selection” in that good well run businesses are likely to flourish other… not so.

  30. What should be published are the attrition rates for advisers since the FSA began virtually running this industry. How many have gone since RDR was spawned ?? and how many are likely to leave this year as the cost of regulation keep mounting ? The fact is that the FSA, FOS, FSCS and MAS are costing all of us (and clients) more than any “miss selling” and Regulation should concentrate on its core objectives and be held responsible for them instead of trying to micromanage an industry for which they are not qualified.

  31. Charles McGinnis 30th March 2013 at 6:00 pm

    The FSA/FCA will never admit they got it wrong unfortunately, so the public has to suffer because of their erroneous assumptions. They have created a whole new industry that is rife with problems and destroyed an existing one, that also had problems, but with some sensible regulation they could have been fixed. I have yet to see why charges could not have been capped and everyone would be on a level playing field. Concurrently, the regulators should have been product testing the highly risky products that were developed over the last 5/6 years, and avoided the huge compensation bills caused. They have failed on almost every count imaginable.
    As far as I can see the FSA had a hidden agenda to reduce the number of IFA’s so it would be easier for them to regulate.

  32. The FSA’s spokeswoman says that the advisers still in the profession have shown that they are committed to increasing the professionalism of the sector. Of course: they put in the effort and had the commitment to get the qualifications. But what of all those who were so close to the end of their careers that the effort was disproportionate in their cases? On 31 December 2012 they were, by definition, fit and proper and appropriately qualified to do the job. On the next day they were no longer fit to do the job. That was nonsense. The new rules on qualification shouldd have applied only to new entrants. The FSA acted in a nonsensical way. Will the FCA be any better?

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