IFA firms could get caught in a "spiral of decline" with falling revenues, increasing costs of conducting business, competition from banks and a lack of investment in low-growth firms, according to the Financial Services Authority (FSA).
In its Financial Risk Outlook 2006 the FSA admits some firms have struggled to remain profitable because of a variety of factors including a lack of consumer confidence, the impact of depressed stock markets in previous years and operating costs. In particular: “concern remains about underlying business models for many firms, which are characterised by lack of capital, low growth and lack of innovation”. In light of this, the FSA says firms need to identify cost-cutting measures and increase productivity to remain viable. Although it predicts an increase in the adoption of new tech...
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