The RDR will cause the IFA sector to lose over 75 per cent of its current client bank, according to former IFA Association director-general Garry Heath.
Speaking at a PanaceaIFA event at M&G Investments in London this week, Life Change chief executive Heath said the retail distribution review will cut the number of people receiving advice from 10 million to two million.
Heath said the estimate that 25 per cent of advisers will leave the industry as a result of the RDR will reduce clients from 10 million to 7.5 million.
He said that number will drop to two million as a result of advisers moving to a new approach where the focus will be on high-net-worth clients.
Heath said: “The RDR will disenfranchise 75 per cent of the current clients held by the IFA sector. The number of people with the capacity to have an adviser will drop from 10 million to two million.”
Heath added that this reduction will damage the advice sector’s ability to use its dist- ribution clout to force down prices. He said: “When you suddenly become an ascentric minority, you do not have that power any more.”
Derbyshire Booth Financial Management managing director Greg Heath says: “Advice will move up market, there will be less choice for consumers and banks and insurance companies will be the big winners.”