The RDR has damaged the confidence of advisers, making them feel that they do not have anything to offer the consumer, according to Positive Solutions chief executive Jim Reeve.
He believes smaller firms will have been particularly badly hit: "Many IFAs are individuals and in some ways it is a very lonely existence.
"You are sat there as a small businessman looking at a troublesome market and there is a massive regulator, which is influenced by a giant bank, imposing changes on you which you don't really understand."
As a result, Reeve says the directly regulated market will be suffering more than other sectors: "If you are a one man band who is directly regulated you're going to be thinking how am I going to put this training plan together, how am I going to move to this new model and what do I need to do about capital adequacy?" he says.
"They will have to take all these things on board themselves, at the same time as trying to service their clients and customers and try and cope with a difficult market."
Reeve says during the last 15 months whilst visiting advisers it has become apparent that although many of them provide lots of "weird and wonderful services", they often do not value the core service offered to consumers.
This includes advisers sitting down with their clients and understanding their financial position and aspirations before making a plan for them, Reeve adds.
He says this is true financial advice but found many advisers believe this is only part of their offering and it is not something clients would pay for.
"If IFAs saw how great their service was, I think the opportunity for them to thrive in the new world is fantastic," he says.IFAonline
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