“It does suggest that a good number of advisers are continuing to choose to operate under a network or a larger firm, rather than being directly authorised which is consistent with what we are witnessing,” said Gazard.
“This may be due to the benefits of scale, support, and compliance that networks and larger firms can offer.
“It’s also well documented that it has become harder for small firms to keep up with PI premiums, compliance and tech spend which can put pressure on the profitability of smaller firms.”
Reason for concern?
While the number of firms have fallen the number of retail investment advisers has stayed static at 31,182, up slightly from 31,144 18 months prior.
This suggests that firm numbers falling should not have an impact on the advice gap as there are still enough advisers for people to talk to.
Cooke said: “I can't see how it affects the advice gap. That will depend on how those larger firms behave.
“Will they raise minimum levels of wealth they advise on or use their size to introduce services for lower value clients? Either way they have to drive profits to cover those costs of purchasing businesses and paying back the PE backers.”
He added it may be that new firms are finding it harder to get authorised.
“When a firm gets sold some advisers there may not like the new owners and look to leave, previously they would have gone directly authorised,” he said.
“That is now taking up to a year so many are joining networks instead just to get going. The number of advisers remains static though, so there are just as many advisers to go around.”
Harrington said while a drop of nearly 500 firms is noteworthy, it is not a cause for alarm.
“The number of advisers in the UK remains stable, and the number of directly authorised firms remains higher than it was even before the introduction of the RDR,” he said.
“Bringing in the next generation of talent and skills to our industry is important, and something Pimfa and our members are actively championing through various initiatives. It is also important to note that traditionally, the number of AR firms in the market has led to a stable 60:40 split over the last decade or so.”
Ormston also found comfort in the fact the number of advisers in the industry has remained consistent.
“There has been talk for some time that the advice industry is filled by people in the second half of their careers,” he said. “I hope these figures may indicate we have younger professionals joining the industry.
