In numbers: the state of financial advice

The key details from Pimfa’s sixth annual report into the state of the UK financial advice market.

Pimfa’s sixth annual report into the state of the UK financial advice market revealed some interesting stats about UK financial advice firms. Click on for the key details from its report, The Financial Adviser Market: In Numbers.

Pimfa’s sixth annual report into the state of the UK financial advice market revealed some interesting stats about UK financial advice firms. Click on for the key details from its report, The Financial Adviser Market: In Numbers.

The Personal Investment Management and Financial Advice Association (Pimfa) report shows retained profits are the best they have been since before the retail distribution review, while pre-tax profits have climbed 23%.

According to unadjusted Financial Conduct Authority (FCA) data, retained profits for firms within the FCA primary category ‘financial adviser’ grew from £102 million in 2016 to £230 million in 2017.

Retained profit as a percentage of revenue leapt from 2.8% to 5.1%, while profits before tax grew from £569 million to £699 million, an average per firm of £151,000 compared with £122,000 in 2016.

Pimfa also noted a ‘surprisingly large jump in turnover, especially since there are less firms’. Turnover in 2017 increased by 22% compared with the previous year.

‘We saw a slight reduction in the number of advice firms, demonstrating some consolidation,’ said Pimfa head of research and indices, Gary Sunderland. ‘Now the number of firms has remained more or less constant for the last decade.’

Pimfa reported there were 13,690 advice firms operating in December 2017, 8,178 of which were appointed representatives. 5,512 were directly authorised.

This marks a drop from 14,254 firms in December 2016. However, the number of staff advising nationwide rose from 25,611 to 26,311. The average number of advising staff per firm also climbed slightly from 4.62 to 4.77.

Pimfa offered a conservative estimate that there are approximately £274 billion of assets under management being administered for private clients in the advice market, while the wealth management industry sits at £975 billion.

‘We see that the financial adviser space is fairly sizeable and could easily represent a third of what the wealth management industry has, which of course specialises in managing assets,’ Sunderland said.

‘So we can see the financial advice market of the UK has major significance when it comes to monitoring private client wealth.’

Pimfa noted a ‘surprisingly large jump in turnover, especially since there are fewer firms’. Turnover in 2017 increased by 22% compared with the previous year.

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