IFA share prices have plummeted by as much as 70 per cent in recent months amid market gloom over the long-term prospects for advisers.
IFA firms, such as DBS and Towry Law, are significantly underperforming compared with the FTSE All-Share index which was down on Monday by 20 per cent from its 52 week high.
At the time of going to press, DBS shares have plummeted by 70 per cent to 97.5p from their 52-week high of 333p. Towry Law shares have fallen by nearly 30 per cent to 47.5p from 67.5p.
Berry Birch and Noble shares have fallen by 23 per cent to 45.5p from 59.5p. SEC, parent company of IFA Network, has seen its shares fall by 55 per cent to 49p from 109p.
The fall in share prices comes despite figures from the Association of British Insurers which show IFA business is booming. But financial services analysts say market pessimism over long-term conditions for IFAs is contributing to share depression.
Analysts point to conditions which include:
The estimated £1.5bn cost to IFAs of the pension misselling scandal.
Pressure on IFAs' traditional business with the decline in the popularity of endowment mortgages and the introduction of Cat standards on ISA equity products which leave no room for commission.
Obligatory FPC3 qualifications for IFAs which make industry entry more difficult and could lead to a lack of operational selling staff.
Life analyst Ned Cazalet says: “There is a lot of competition. The future for IFAs looks difficult. IFAs will be under pressure for the long term.”
DBS marketing director Steven Spilsbury says: “There is a general uncertainty in the market over the pension review. Companies need to sort out the pension review problem. Until they do, share prices will remain depressed.”