UK Financial Adviser Market – 2021

By Heather Hopkins | 05 August 2022 | 2 minute read

The UK financial adviser market is growing in number of advisers but shrinking in number of clients.

The FCA published their annual update on the financial adviser market based on RMAR data. I wanted to share my thoughts on what I found most interesting:

More advisers in slightly fewer firms:

  • The number of advisers grew again in 2021. At year end there were 27,839 staff advising on retail investment products. There were 338 more advisers in 2021 than in 2020 and the numbers have been growing steadily over the past seven years.
  • These advisers work in a slowly shrinking number of firms – at 5,118 directly authorised firms, down from 5,137 in 2020. There are a lot of headlines about consolidation but the numbers take a while to trickle through. Changes in status don’t happen overnight. We’ve been tracking the data the FCA publish since 2015. The number of firms peaked in  2017 at 5,281.
  • These numbers only tell part of the story. Networks count as one firm. Appointed reps don’t show up in the adviser firm numbers. Our analysis suggests the number of AR (appointed rep) firms overtook the number of DA (directly authorised) firms last year. It’s becoming harder for small firms to keep up with PI premiums, compliance and tech spend. We think we’ll continue to see the number of DA firms shrink.

Number of UK financial advisers

Fewer new clients means fewer clients

  • The number of new clients for financial advice firms dropped 10% in 2021. The only year in the past six in which financial advisers saw an increase in clients was in 2019 – the year Covid hit and we all had more time to sort our finances and we were all faced with our own mortality. Otherwise, the number of new clients to financial advice keeps dropping.
  • The number leaving advisers is also declining. Financial advisers ended 2021 working with fewer clients than in 2020 and 2019 but more than the three yeas pre-Covid.

Uk financial Adviser clients

PI premiums are up but almost flat as a % of revenue

  • PI premiums were up an average of 8% for financial advice firms in 2021.
  • Smaller firms were hit hardest by increases. Sole traders saw premiums increase 12% and firms with 2-5 advisers saw premiums climb 9%.
  • Premiums as a percentage of revenue were almost exactly the same as 2020 at 2.3% (down from 2.4%)

You can get all the data for the 2021 release from the FCA’s website.  We’ll be publishing more analysis of the financial advice market in our forthcoming Financial Advice Business Benchmarks report. Financial advice professionals that want to take part can do so here.

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