Speaking candidly at the annual Bankhall conference in the Algarve as he prepared to hang up his shoes as chief executive, Mann admitted that the sector will shrink following the retail distribution review but was confident that small firms will still represent a marching force amid the ranks of IFAs.
He said: “If we look at 2015 when the RDR will really bite, the number of IFAs with business productions of up to £500,000 a year will decline from 70 per cent to around 50 per cent. That is a decline but absolutely not a demise as many commentators predict.
“There will be consolidation in the marketplace. It is natural and it is desirable but that 50 per cent will still represent a marching force in the IFA community.”
Addressing the choices that will face small IFAs, Mann said: “The choices for advisers are stark. They are to be consolida- ted, to exit voluntarily or on a planned basis or to transition.”
This transition will involve a marked shift from transactional advice to passive inc- ome, he said. “It will be financially and conceptually tough but if they want to realise value in their businesses in future, the only value is in passive income. So they are going to have to make that journey and it is quite a long one,” he said.
Mann said an element of blurring in advice and sales will accompany the final version of the RDR on November 25 but was hopeful that a clear outcome will be achieved in terms of “what an adviser feels he should be able to do and how is he able to offer advice for sales”.
Mann gave up his responsibilities at the firm on Monday to take up the role of chief development officer for parent group Skandia UK. He confirmed that Bankhall non- executive chairman Mike Gordon will take on wider executive responsibilities until a new chief is appointed in his place.
He said: “We are going to appoint externally and that search will begin immediately on my return to the UK. I will be involved along with Skandia and I clearly have a view of the sort of person I want to work with the team and deliver our plan but it is about getting it right rather than getting it quick.”
Sources within Bankhall suggest the decision could be reached within a month.
When probed on the likelihood of conference keynote speaker and former Sesame boss and Just Retirement chief operating officer Patrick Gale taking the helm, Mann said: “He was invited as a very good friend and someone who has run a very successful distribution channel with great insight into the marketplace.”