APFA: adviser market is stabilising

The report, The Financial Adviser Market: In Numbers, shows that the year to 2014 saw an increase in the number of advisers by over 6% and, despite the volume of high profile Mergers and Acquisitions activity, there was a small rise in the number of advice firms.

Overall, there was an increase in turnover (by 13%) and profits before tax were up by 5.3%. Retained profits rose in 2014 to £171m, but margins remain low under 5%.

The total number of financial advice firms registered with the FCA as at 31 December 2014 was 14,550, an increase of almost 1% since December 2013.

The split between directly authorised firms and appointed representatives, at 36%:64%, has remained largely unchanged over the last seven years

Chris Hannant, Director General of APFA, said:

"Two years after the Retail Distribution Review was implemented, the year to 2014 saw an increase in the number of advisers but it is still lower than before RDR. The number of firms in the market has remained stable despite the number of mergers and acquisitions. Turnover increased by 13% and profits before tax rose by 5.3%.

"The trend in the rise in the proportion of product sales on a non-advised basis continued, up from 50% in 2012/13 to 67% in 2013/14. As expected there has been an increase in fee based income with retail investment products, which saw such income year on year increase by over 85%. More worryingly for the future, the UK savings ratio fell, but the amount of funds held in stocks and shares ISAs rose by almost 5%.

"The data suggests a stable market despite the challenging volume of regulatory change. Pension reform highlights the need for advice, with the government and FCA making financial advice a key protection for consumers making decisions about guaranteed pension rights. The obstacles to consumers accessing affordable advice remain such as the increasing cost of regulation. APFA has published a Manifesto for Financial Advice, in which we outline our ideas on how the government, the regulator and the profession can address these challenges."