Bradbury says a combination of the retail distribution review, with its increased drive towards professionalism and the need for further qualifications, worsening economic conditions and treating customers fairly will force many older IFAs to quit the industry.
He says the impact will affect smaller IFAs most severely. Bradbury says: “A lot of firms, particularly transactional type businesses, are finding their new business levels are falling but their overheads are static or rising potentially,and they are going to find that a very big squeeze is on.
“This is coupled with the average age of an IFA, the RDR and initiatives such as treating customers fairly, as firms are not in a position to be able to do so. Over the next three years, we could see anywhere up to a third of IFA firms disappearing.”
Bradbury says some IFAs will retire or sell their businesses while others may seek to merge with another business in an effort to deal with the increased regulatory and financial pressures.
He says with a predicted drop in the number of RIs as well as the number of firms, the number of consumers who can get access to the services of IFAs will also shrink.
Bradbury says: “Regulatory costs have created a different type of model and being the client of an IFA could become something for well-off peo- ple which would be a dread- ful shame.”