The FCA’s latest Retail Mediation Activities Report - out this week - provides an interesting snapshot of the adviser sector. It shows a rather mixed picture but not necessarily a bad one.

On the disappointing side, overall the 2024 report, using the latest FCA data, shows an adviser sector which has plateaued, at least in terms of adviser numbers. 

In 2024 the number of retail investment adviser numbers fell by about 1% on a year earlier to 37,411.

Despite expectations of rapid growth in adviser numbers to help meet the 'advice gap', it hasn’t happened and there is no sign of it happening either.

The Personal Finance Society and others have launched laudable campaigns to attract new blood and many larger adviser firms are running successful academies which train hundreds of new advisers but these initiatives may take a while before the fruits are apparent.

At the other end of the career scale, there is a queue of advisers waiting to retire, helping keep down growth in total adviser numbers.

The sector remains one built around a modestly-sized, ‘practice-based' model. Financial Planners have more in common with GPs than they do with the mass market shifting of financial products and perhaps that’s the right thing.

It is certainly a profitable place to be, as the FCA figures show. Revenues generated by retail investment intermediaries increased by 6% in 2024 to £5.7bn (2023: £5.3bn), growth comfortably above inflation. Not a booming sector but not too shabby. 

On the downside, the number of retail investment adviser firms has fallen from 5,678 in 2020 to 5,016 in 2024. Interestingly, over the same period the number of staff working in these firms rose from 36,377 to 37,411, an increase of over 1,000.

These figures support the view that we are seeing a more profitable profession, growing steadily in terms of revenue and staff but the number of advisers and planners is staying about the same. Financial Planners are expensive to employ so it may well be that firms are adding more support staff and Paraplanners to maximise investment in their increasingly highly qualified Financial Planners - perhaps in the same way that a local GP practice is supported by a small army of admin staff, nurses and receptionists (if you’re lucky!).

Planners themselves are mostly doing well and firms are consolidating and enlarging in many cases as a result. M&A is having an effect.

Interestingly, adviser firms had a good year for attracting new clients in 2024 with the number of new clients reaching 534,869 during the year (449,322 in 2023). At the same time the number of existing clients who ceased being clients in 2024 was 335,286 compared to 252,270 - a factor some experts have attributed to the impact of the Consumer Duty nudging some firms to jettison lower value clients.

In total, the number number of advised clients fell from 4.03m in 2023 to 3.92m in 2024, a similar number to 2022.

The upshot is the profession is doing well but recruitment and development of new talent remains a challenge. Many are beginning to tackle this issue and it’s an important one - it’s difficult to see the profession growing significantly without more hands on deck.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin 

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