
So, is the small UK financial advice firm on the brink of extinction? Well, it depends who you ask. Some might say it's as inevitable as butcher shops vanishing from the high street. Others, like Greg Moss of Eleven.2 Financial Planning, would beg to differ—quite passionately, in fact. So, who’s right?
Let’s set the scene: small advice firms, particularly those with one to five advisers, still made up a whopping 88% of all directly authorised firms in 2023. But, let’s not get too comfortable. Regulation, technology, and the looming shadows of asset consolidators are taking their toll. It’s enough to make you think we’re witnessing the slow, inevitable decline of the cottage industry that is small financial advice. And if you believe Tim Sargisson’s Money Marketing article, you might just think the small advice firm is following the same trajectory as greengrocers, fishmongers, and butchers. What next? A museum exhibit titled "The Extinction of Financial Advice"?
But before we sound the death knell, Greg Moss is here to tell us, “Fat chance!” In fact, he suggests that the real innovation and the best client outcomes are still very much the domain of small firms. His perspective? The day the big firms outcompete him on service is the day he’ll start worrying. Until then, he’s not packing up his briefcase just yet.
The Regulatory Burden and Mental Wellbeing
There’s no denying that regulatory pressures are making life tougher for small advice firms. The FCA, despite its efforts to “bust the myth” that it’s anti-small firms, continues to heap compliance burdens onto the sector. 35 reports a year? Check. Endless box-ticking exercises? Check. Stress-induced headaches? You bet. It’s no wonder that mental wellbeing is becoming a serious concern. For many small firm owners, keeping up with the FCA’s demands feels a lot like trying to run through treacle while carrying a boulder on your back.
Increased regulation has undeniably led to a few early retirements. And when these old-school advisers decide to sell up, who’s there with open arms? The consolidators. As the larger firms swoop in, snapping up assets, we’re seeing a clear shift in the industry. More compliance, less joy. More mergers, less independence. It’s a cycle that has left many wondering whether the small advice firm has a future—or whether it’s time to cash out while they can still get a decent price.
Future Firm Valuations: Steady Decline or Just a Blip?
Now, let’s talk valuations. It’s no secret that many advisers are selling their businesses as part of a retirement strategy. But here’s the catch—future valuations may not be as rosy as they once were. The regulatory straitjacket is tightening, and the uncertainty in the market is enough to give anyone pause. Is the grass greener on the other side of a sale? Perhaps for now, but there’s a distinct possibility that firm valuations will drop in the near future, leaving some advisers wondering whether they’ve missed the boat.
Greg Moss, however, remains resolute. Small firms, he argues, can do things big firms can’t. They’re nimble, they can offer a personal touch, and they’re not bogged down by the “sclerotic compliance” and “dysfunctional politics” that come with scale. In his view, clients don’t just want slick tech and fancy dashboards—they want genuine care, long-term relationships, and service that adapts to their needs. And that, he claims, is something only a small firm can truly deliver.
Tech: Friend or Foe?
Ah yes, technology—the ever-present spectre that haunts financial services. While some might say that digital financial services are the future, Greg Moss has other ideas. Sure, big firms can throw money at shiny new tech, but does it really matter to clients? Moss suggests not. According to him, it’s the quality of human interaction that clients value most. Tech is nice to have, but it’s far from the silver bullet that’s going to send small firms packing.
Clients, especially younger ones, seem to agree. Many of them have tried the robo-advisers and found them lacking. It turns out that algorithms can’t replace the kind of relationship that a trusted adviser can provide. And while big firms might boast about their seamless “soup to nuts” experience, Moss argues that no amount of tech can make up for a lack of genuine client care. In fact, some clients are actively fleeing the consolidators in search of the kind of personalised service they once enjoyed from their local IFAs.
The Final Curtain?
So, is this really the end for small advice firms? Tim Sargisson would have you believe we’re on the verge of a mass extinction event. Consolidation is kicking in, older advisers are retiring, and regulatory pressures are squeezing the life out of the small players. But, according to Greg Moss, reports of the death of small firms have been greatly exaggerated. He argues that small firms, far from being an endangered species, are thriving by focusing on what really matters—client relationships, personalised service, and yes, even a bit of old-school charm.
As for the future? Well, it’s not looking easy. Over-regulation and the relentless march of technology will continue to challenge small firms. Mental wellbeing issues are real, and many advisers are feeling the strain. But for those who can navigate these choppy waters, there’s still hope. As long as there are clients who value a human touch, small firms will have a place in the market.
In the meantime, as the industry continues to shift, one thing’s for sure: it’s going to be an interesting ride. And as we sit back and watch, let’s just hope the last one out remembers to turn off the lights.
What’s your take? Are small financial advice firms heading for extinction, or is Greg Moss right—fat chance? Drop your thoughts in the comments below!
Kommentare