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The worrying lack of adviser succession


The third edition of The Heath Report is due in May. There have been two THRs so far. THR1 was issued in September 2014. It was a hastily constructed document that looked at the availability of advice post-RDR. Although it was well received, it suffered from a narrow survey base.

THR2 was issued in March 2015. It was created from wider survey research driven by Action Consulting, desktop research from regularly published documents and other material shared with us.

It found that 10 million clients had left the sector. This was due to it losing 6,000 mostly transactional advisers, with surviving ones dropping average client/adviser ratios from 405 to 195.

THR2 was sent all over the world. Even the UN has copies of it. It had a significant voice in the RDR debate in Canada and South Africa. Here, it became a major discussion document at the Treasury select committee.

The market has developed further in the two years since, so THR3 will re-run its surveys on adviser/client ratios and business models to see what changes have occurred.

It will also have a new segment looking at the firms’ potential longevity and succession plans.

The sector has lost its traditional “feeder” channels. If it is to maintain or expand its capacity it needs to know how long existing advisers are likely to be in play and who might succeed them.

With the average age of advisers slowly increasing, we need more detail to plan otherwise we will sleepwalk to an uncertain future.

We will start THR3 this week, surveying both members and non-members on current running costs and attitudes to succession.

Garry Heath is director general of Libertatem



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In my previous column for Money Marketing, I said I would reach out to Garry Heath to hear what he had to say about Libertatem. You might recall me describing him (and his ilk) as pugnacious. In contrast, I would be courteous and open-minded. Who was I kidding? I had already decided I would not […]


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Well what a surprise !! The industry regulators make it harder and harder to continue to trade in this business with unlimited lifetime liability, the treasury levies ever increasing fines and penalties which it then gives to good causes instead of using it to help the honest businesses that never get any complaints and the ombudsman takes the view that the client is always right unless it is proven otherwise at our expense – hardly any surprise that no-one want’s to enter our wonderful industry any longer is it !!

  2. Yes its true our profession is rather like the Aral sea.

  3. Yet again this smacks of an agenda (I’ll leave you to figure which agenda) rather than reality.

    Large firms do not appear to have succession problems. So by inference we are addressing the medium and smaller firms. In general these are run by owner managers. In this case succession could be to the next generation in the family, but remember the mantra “Riches to rages in 3 generations”

    The firm could be taken over by the staff. This is essentially a buyout or a sale.

    And the third option is obviously a sale. This of course will depend on the relative attractiveness of the firm to be sold and the willingness of the owner to sell. (But what other choice do they have?)

    However I think Mr Heath and his researchers are perhaps overlooking a basic tenet of capitalism as laid out years ago by Schumpeter – Capitalism’s creative destruction. If the business sector is attractive and worthwhile it will always attract entrants. It is of course a moot point as to whether these entrants will be micro firms; as undoubtedly regulation has conspired to make this a large hurdle for the small start up. And it has been the small firm that has been the major progenitor and constituent of the advice sector.

    But in the end economics will decide.

  4. By the time the next 2 reports have completed Advisers over 55 will have shut up shop or thinking of doing so and there will be a new government initiative to find out “what happened to the advice retail market”

  5. Perhaps, in the future, investors can make all their investment decisions based on tweets from the unqualified?

    Seems to be an acceptable modus operandi in many fields these days!

  6. Being in my mid 30’s the ageing of the adviser population could benefit me in the long run. In 10 years time I might be the only guy left………….

    All joking aside the only people likely to benefit from the disappearance of smaller firms are the Hargreaves and SJP’s of the world. When an IFA hangs up his boots his clients will go looking for another adviser (hopefully) cue the marketing magic of the big players.

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