Written on 13/10/2022

The attached graph shows just how much the IFA landscape has changed in the last decade since pension freedom.  

IFAs were the leading part of the retirement market as DB schemes receded during the period 1994 to 2014 when the Budget heralded the ability of pension holders to cash in their pensions for a one off tax hit.  Now IFAs are firmly in second place.

That twenty year period of prosperity is drawing to an end, and with the higher qualification requirements that came in on 1st January 2013, so the IFA industry has reshaped itself over the last decade.  Much leaner, much more efficient, probably half the number of practicing IFAs, and mostly in much larger regional practices.  IFAs are the backbone of the pension market, but increasing employers who have set up auto-enrolment and the associated IT information flows is changing things.  

What should IFAs do about it, and how should they adjust to the next ten years?  Here is what IFAC say, having been around as IFA Compliance Ltd since 1998....

  1. Focus on pure investment advice, not just tax deferring PERSONAL pension plans.
  2. Advice, not arranging, is the new currency
  3. More holistic advice required
  4. Less commission, more consultancy fees. 
  5. Inheritance tax and intergenerational work
  6. More links to employers and accountancy practices
  7. In a high inflation environment, anyone who leaves their money in cash or bonds risks being wiped out by inflation.  Negative interest rates rule.  It makes no difference if you invested in Imperial Russian Bonds dated 1913 or in 1914 3.5% UK government bonds at the same time.  While the Russians defaulted, western inflation just as surely wiped out the other bond holders.  It is time to invest in shares and real assets, and you are the gatekeeper.
  8. There has never been a better time to be an IFA.  If you have a licence as an adviser – treasure it, because the regulators have virtually stopped giving them out during 2022. Your licence is a valuable thing.

Download the interactive report here

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