The Quiet Decline of Independent Advice
Why the IFA model is losing its middle ground; and what’s needed to rebuild it
The independent financial advice (IFA) sector in the UK and Europe is facing an identity crisis. On one hand, seasoned advisers with robust client books are being snapped up by consolidators or are exiting the industry entirely. On the other, there’s a vacuum forming a generation of younger advisers entering employed roles without building their own books and lacking both the assets and autonomy to drive their careers forward.
It’s a classic barbell effect: at one end, you have ageing advisers who’ve built significant value and are now cashing out. At the other, you have juniors entering firms with little control over client relationships. In between? Not much.
As the Financial Times recently highlighted, “Nearly half of financial advisers are aged over 50, while just 6% are under 30.” That data paints a clear picture: the talent pipeline isn’t just thin… it’s barely functioning. Without mid-level, entrepreneurial advisers to fill the void, many firms are relying on consolidation to bridge the talent gap.
The problem isn’t a lack of demand. In fact, it’s quite the opposite. According to the FCA, over 90% of UK consumers who sought financial advice in 2023 were aged 45 and over, a demographic that’s only growing. Meanwhile, the FT reported that adviser headcount dropped by over 10% in 2023 following the implementation of Consumer Duty. As the FT put it, “The proportion of UK adults getting regulated financial advice has dropped from 11% to 9%,” due to both regulatory pressure and adviser attrition.
Citywire has also highlighted the consolidation effect. Many IFAs are being absorbed into larger wealth management groups, attracted by the promise of exit multiples, operational support, and a path to retirement. But with that comes a loss of entrepreneurial spirit. For the new generation, the same consolidators offer salaried roles that don’t incentivise client acquisition creating an ecosystem where fewer advisers are truly “independent” in the classical sense. Or as FN London put it, “Private equity is now facing a tough exit from wealth’s M&A boom... a lot of people will be left at the altar.”
And it’s not like the industry isn’t aware. In a recent article, Citywire reported, “The PFS has pledged £1 million to address the adviser shortage,” underscoring the profession’s concern about its long-term sustainability. But throwing money at the problem won’t fix the underlying issues: a lack of structured mentorship, unclear progression routes, and poor alignment between incentives and independence.
The bigger question is structural: is the issue that there are too many firms fighting for a dwindling pool of talent, or is it that the pathway to becoming a successful IFA has become too opaque, too slow, or simply too unattractive?
Either way, the industry faces a reckoning. Without a rethink on training, succession, and incentivisation, the IFA sector risks becoming top-heavy, with not enough fresh blood to service a growing, ageing client base. As one FT columnist warned, “We may well look back on this period as the moment the independent model quietly stalled.”
Share Blogs Via
Latest Blogs
