A wave of consolidation is primed to grip the UK IFA market, with 32% of advisers considering selling their business, according to research from Canada Life.
Regulation, economic volatility and cybercrime were among the key pressures flagged by survey respondents.
Among those assessing their M&A options, 38% believe they will sell to a bigger organisation.
The industry has already witnessed a spate of acquisitions by larger firms; notably Kingswood, St James’s Place, Quilter and AFH Group.
Although the latter recently announced it will hit the pause button and concentrate on integration and organic growth for the foreseeable future.
Writing on the wall
Neil Jones, tax and wealth specialist at Canada Life, said: “There is a clear signal that advisers are feeling under pressure, which is catalysing change in the industry.
“When they look at the future, advisers who are looking to sell expect to be acquired by a larger organisation, rather than merge with a smaller firm.
“In short, the industry looks set for a fresh wave of consolidation.
“The benefits of scale are clear, but it may also be possible for advisers to gain some of those benefits by forming networks and strategic alliances.”
Compounding challenges
It’s not just advice firm sales that will see the industry contract, as 28% of the 185 advisers surveyed are considering retirement.
Meanwhile, nearly two-in-five advisers are looking at withdrawing from certain markets.
Just 10% of respondents have plans to expand their operations, while 7% would merge with another firm.
Six and a half years on from the introduction of the retail distribution review, the industry is almost unrecognisable.
If we were able to fast-forward six years into the future, it’s pretty safe to assume that, given the rate of change, the UK advice sector will be equally unrecognisable to us.
