Ernst & Young believes advisers who remain in the industry post-RDR will be able to charge higher fees because of the rise in demand for advice.
Speaking at the PIMS conference on board the Aurora today, Ernst & Young director Malcolm Kerr (pictured) estimates that adviser numbers will reduce by a third by 2015, allowing the remaining adviser community to take advantage and charge higher fees.
Kerr said: “We see around a third of advisers pulling out, which means an increase in the demand for advice, and as a result advisers will be able to benefit and increase their fees as the supply of advice decreases.”
Kerr, who was predicting the shape of the advice landscape in 2015, added the regulatory burden would not decrease when the FSA moves to its new structure next year.
“The regulatory burden will not diminish when it moves to become the Financial Conduct Authority. There will continue to be a small number of advisers who do not behave in the right way and will let the rest of the industry down.”
Kerr went on to say that advisers conducting due diligence on platforms should concentrate on how easily the platform has found it to make profit and how much money the platform has had to spend to reach profitability.
“There are platforms who have large amounts of turnover and assets that are yet to reach profitability, advisers should be looking at that. When choosing a platform they should be thinking about what profits look like compared to the amount of investment in the development.”