However, restricted firms accounted for 39 per cent of adviser-charging revenues in 2016 and 40 per cent in 2017. Furthermore, 89 per cent of all advice firms have fewer than five advisers, and only 1 per cent of independents have more than 50 adviser staff. Larger firms, which are more likely to be restricted, employ roughly 50 per cent of the total adviser population.
For new entrants into the adviser space, the type of advice they provide will very much depend on the firm that gives them the opportunity. As the previous figures show, restricted outfits tend to be larger and therefore have greater resources to employ and train budding intermediaries.
Adviser schools look set to play a key role in this. Some 293 advisers graduated from SJP’s academy last year, boosting both its adviser headcount and that of the restricted space in general.
Another academy that is experiencing success introducing new blood into the profession is the Quilter Financial Adviser School.
Unlike SJP’s model, advisers finishing the Quilter programme have no clear path to join a specific advice firm. Instead, the school has established links with a number of adviser businesses – including its Intrinsic network – that are both restricted and independent, and seek to match graduates to both. This supports the argument that opportunities lie in both propositions.
Darren Smith, head of the Financial Adviser School, says: “FAS isn’t trying to make money; the industry needs new advisers, so we’re investing in the model. We are also open to the whole of the market. Some students studying with us are with other networks, quite a large number that are directly authorised firms.”
Mr Thompson believes there is still room for both approaches. “There will always be a place for high-quality, independent advice as some customers are looking for completely unrestricted whole-of-market advice,” he says.
“But a restricted model is ideal to safely deliver controlled advice at scale. Scale can bring some advantages in terms of driving down cost, but it has to be achieved through the right processes and that’s why a restricted model is ideal.
“Crucially, I think both kinds of advice can be delivered with the character and respectability of a local business, but we also see opportunities for consumers looking for a well-known and trusted brand to stand behind the advice being given.”
It is unlikely that many will disagree with the view that both independent and restricted advice can sit side by side in the profession. It is also important to note that the FCA’s wrath has not been limited to restricted models.
