RDR impact in numbers
An FSA commissioned report into the market impact of the Retail Distribution Review (RDR) has predicted major changes for the IFA arena which will undoubtedly have repercussions for those candidates seeking IFA jobs, paraplanning jobs and administration jobs.
One of the key points is that by 2012 we should expect to see an exodus of smaller IFA firms from the market, with 46% of those practices with revenue under £50,000 to disappear altogether, the majority directly due to the RDR. This will lead to an overall drop in the number of IFA firms of 25%. Such a fall in advisory practices is expected to cause an 11% reduction in overall adviser numbers and a perhaps even more troubling number for those set to remain, a 9% reduction in overall revenues.
So what impact will this have on the IFA jobs market?
Firstly, such consequences have long been expected by the majority of individuals working in financial services. Increased costs and tighter regulation have already contributed to a heavier burden being placed on adviser firms, with smaller practices the most vulnerable. The RDR will speed up this process as it adds the difficulty of passing additional exams and changing the charging structure to the melting pot.
Since 2008 there had already been a marked increase in the number of self-employed advisers and sole traders applying to IFA jobs (not to mention paraplanning jobs) as they seek greater support and structure which has no doubt already contributed to a drop in the number of advisory practices. With the oft quoted maxim about the average age of IFAs borne out by the statistics, many are still not in a position to complete the Diploma by 2012 and many have probably opted not to, instead hoping to sell (if they can) or pass on their businesses. Therefore a drop in adviser numbers is of no great surprise.
It is still difficult at this stage to know whether such factors will encourage the IFA jobs market (less advisers means more opportunity) or discourage it (less advisers but possibly less clients willing to pay fees too). Certainly acquisition and consolidation has stepped up in recent times, paving the way for existing advisers at such firms to be given more clients to service which has no doubt improved their personal circumstances. Similarly perhaps the larger companies with the greater marketing spend can benefit even more from a raise in profile which may encourage clients to leave the banks and seek their financial advice elsewhere. Again, another positive to the IFA jobs market.
The Financial Services Consumer Panel certainly thinks so; that a reduction in advisers will result in a smaller yet better qualified salesforce, certainly one of the main aims of the RDR.
On the flip side though the loss of highly experienced advisers, who have built up strong bonds with the local community, may yet drive their clients away from independent advice, especially those who arenít comfortable with paying fees.
Away from front line advice it could be argued that increased compliance and higher expected standards will necessitate the growth of technical support teams, great news from those currently scouring the internet for paraplanning jobs and administrator jobs. The evidence so far this year, with a much higher number of paraplanning jobs and administrator jobs being registered, would suggest so, as is the growing realisation that support functions are as valuable to IFA firms as the advisers themselves.
If however the economy picks up considerably such internal factors may not be as relevant as more and more companies will seek to get back to the recruitment levels seen in previous years. Any increase in the number of IFA jobs will have positive repercussions for the number of paraplanning jobs and administrator jobs, with it difficult to see, barring another dip back into recession, how the financial services job market could get any worse.