A dearth in mortgage availability and sluggish ISA sales are heaping further pressure on transactional adviser firms, warns IFA Bradbury Hamilton.
Managing director Sheriar Bradbury says firms that mostly rely on initial over trail commission will struggle as the current climate presents fewer opportunities to write new business.
Bradbury, whose firm has made 35 acquisitions since its inception in 1993, also points to research by True Potential which suggests only 16% of firms’ total turnover is based on renewal commission.
He says his firm, which is part of the IFA-owned Nucleus platform set-up, will this week write to more than 300 other IFAs highlighting the potential impact of the economic slowdown on their businesses, and the benefits of being acquired by another company.
“In the current climate of uncertainty and continued shortage of liquidity many advisers could be considering their future,” he says.
“The reticence amongst investors, evidenced by what appears to be the worst ISA season on record, makes worrying times for those advisers who rely on initial commission instead of recurring income to support their business.”
In February, Bradbury Hamilton said more and more one-man band IFAs were selling up as a result of increased regulatory and administrative pressures.
“We are writing to advisers because we understand the mounting pressures associated with running an advisory business in today’s world," Hamilton says.
“New rules such as treating customers fairly (TCF) with its emphasis on justifying income received and the Retail Distribution Review particularly in respect of having satisfactory qualifications, are the latest in a long line of challenging developments that promise further disruption and change for advisers.”
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