The number of adviser firms providing independent financial advice fell 5% (year-on-year) in 2024, according to data from the latest FCA Retail Intermediary Market Data report out this week.

There were 4,292 firms providing independent financial advice in 202, FCA data showed.

The number of firms providing independent financial advice has been steadily declining since 2022 (4,729 firms), with only 4,515 firms doing so in 2023.

The number of restricted firms also fell 7% to 584 (2023: 632).

Consolidation in the adviser sector is likely to have been a significant factor, with many larger adviser firms snapping up smaller firms during 2023 and 2024.

Of all the firms providing retail investment advice in 2024, 87% provided independent advice, while only 12% provided only restricted advice. The percentage of all firms that provided both restricted and independent advice was 1.4% in 2024, compared to 2% in 2023.

In total there were 5,016 firms providing retail investment advice in 2024, a 4% fall from the 5,299 in 2023.

The number of smaller advice firms continues to decline. In 2024 the number of firms with a capital requirement of under £5,000 fell 3% to 1,977 (2023: 2045). The number of firms with a capital requirement of between £5,000 and £20,000 also fell 2% to 1,692 firms in 2024.

The capital requirement is the amount of money the FCA requires firms to hold in order protect clients. The more assets a financial adviser holds or advises on, the higher the capital requirement.

The number of medium-sized firms remained relatively stable with 3,077 firms with a capital requirement of between £20,000 and £100,000 in 2024 (2023: 3,102).

The number of large firms rose slightly. There were 1,449 firms providing financial advice in 2024 with a capital requirement of over £100,000, a 2% rise year-on-year and 18% rise since 2020.

Type of advice provided across firm types

Source: FCA Retail Mediation Activities Return for 2024

The FCA Retail Mediation Activities Return must be completed by all firms that advise on, or arrange mortgages, insurance policies or retail investment products for consumers. The latest report reflects returns submitted to the regulator in 2024, the most recent period available.

The FCA categorises firms based on their main regulated business activity. The categories changed in 2020, making it hard to make comparisons before this date.