19Jun

For its latest data bulletin, the Financial Conduct Authority (FCA) concentrates on the retail intermediary sector, using data submitted by around 12,000 advisory firms via the Retail Mediation Activities Return. The figures largely relate to the calendar year 2017, and how it compares to 2016.

Firms’ revenues from retail investment and home finance activities increased significantly when the figures for 2017 are compared to the equivalent statistics for 2016, with growth of 21% and 26% respectively being demonstrated in this area.

Total revenues reported by advisory firms grew by 22% over the year. Revenues from mortgage broking were up by 23%, but those reported by insurance intermediaries only rose by 7%.

20% of advisory firms’ revenue still comes from commission – it is to be assumed that this income comes largely from mortgage and insurance business.

The number of clients paying for an ongoing advice service from an authorised firm rose by 36% over the year, and now stands at 2.8 million. Firms also provided one-off advice to 1.2 million clients during 2017.

96% of advisory firms reported that they made some form of pre-tax profit, and the sector’s total pre-tax profits rose by 23%. The average pre-tax profit margin at sole trader advisory firms was as high as 43%, whilst as many as 28% of the firms with 50 or more advisers actually made a loss during 2017.

Other statistics from the bulletin include:

  • 89% of firms said they had five or fewer advisers
  • 84% say they still provide fully independent advice, and this figure is largely unchanged from the 83% reported the previous year. However, whilst only 14% of firms described their advice service as restricted, these firms generated 40% of the sector’s total revenue from adviser charges, suggesting that it is often the larger firms that choose to go restricted, while the smallest firms stay independent
  • More than a third of firms use a percentage of the investment amount as their main charging method, and this method is more than twice as popular as the fixed fee method, where set amounts are charged for completing various stages of the advice process

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article