Recent figures show a steep decline in the number of advisers in the market. Helen Morrissey asks whether there will be enough advisers to meet the demand for retirement advice
The advent of RDR was always expected to affect adviser numbers. Some advisers will choose to retire while others will sell their client banks on to other firms.
However, just eight months into the new RDR-ready world we can see adviser numbers have declined faster than many could have predicted.
Figures released by the Association of Professional Financial Advisers (APFA) in July showed there were 20,453 individuals operating as of 31 December 2012.
These figures were based on individuals holding the CF30 function who had a primary category “financial adviser” under Financial Services Authority stipulations.
APFA said the figures provided an update on a report it published in March, which found adviser numbers dropped from 26,339 at the end of 2010 to 23,865 by the end of 2011.
APFA managing director Chris Hannant admits the decline is steep: “I think we’ve seen a bit of bounceback in these numbers with some people finishing their exams but it is still a substantial fall,” he says.
“We did expect there to be some level of drop-off – for instance some would look to retire but we weren’t expecting this. Those advisers who remain in the market are busy enough looking after the clients they have without having to look out for more. There’s not a lot of slack in the market right now.”
So with this in mind are we likely to see a gap developing in the advisory market and what are the implications of that? Will people who need advice be able to access it?
Premier Wealth Management managing director, Adrian Shandley believes a gap is occurring and it could be to the detriment of the general public.
“The advice gap will definitely happen and it is not a problem that has been unforeseen as you can see in the way the government is trying to corral people into the Money Advice Service,” he says.
“This service isn’t going to be enough for many people as there are so many technical areas to people’s financial affairs that they are going to need some kind of technical advice. You can’t have people thinking that they can do this stuff on their own.”
The issue could also have far reaching consequences in terms of the numbers of people seeking retirement advice over the coming years. As the baby boomers continue to retire in their droves their need for advice will grow. Will there be enough advisers in the market to service them?
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