Hei hei, it me again back from adventures above the 60th parallel. Thank you to the cats who took Update duties so I could go and muck around with people much, much more heavily tattooed than even I expected. The Finns are not mucking around with…well, anything really. I mean, imagine going to a metal festival and deciding to get a tattoo there at the big, open tattoo stand which involves you lying there with the tweeds whipped down for a couple of hours while 16,000 metalheads wander past and inspect your reddening bahookie. But what a country; if you get the chance to go North, you should take it, and remember to jump in a lake while you’re there. If anyone would like a slideshow I’m very happy to pop round.
Writing the Update is a gift this week not because of Finnish exploits but because it’s the most wonderful time of the year; I speak of course of the FCA’s annual publishing of the advice market in numbers. This is taken from the RMAR data you all hate doing and which lots of things depend on, so thanks all of you who put your numbers in. Paljon onnea!
Before I dive in to what is clearly analysis prepared by Mike Barrett who finds this stuff so exciting he needs a quiet moment before updating all the charts, a quick word. The FCA stats are canon; they are the Ur-text from which nearly all advice market analysis is derived. They are also free to access and open to anyone and even have graphs in case you experienced major trauma reading numbers as a callow youth or whatever. Over the years I’ve seen far, far too many folk trying quietly to pass these stats off as their own work (“our advice market analysis shows there are XX fewer firms in 2023 than 2022”). Don’t accept anyone trying this nonsense; if you see something that looks like it’s about the size, revenue and profitability of the advice market it’s almost certainly the FCA’s numbers and should be referenced as such. You definitely don’t need to pay to be told, and I speak as someone that gets paid for telling people stats and stuff.
Righty ho. Here are some highlights:
- The supply of advice firms and advisers has been pretty steady for nearly a decade. 2023 is the first year both have fallen – from 5,592 firms in 2022 to 5,299 in 2023 and 37,381 to 37,136 staff. So not a big fall, but still.
- We’ve said for ages many firms aren’t hunting new business so much; ongoing advice fees now represent 79% of sector revenue, up from 77% last year (and 61% as far back as 2016).
- The number of initial advice services is at its lowest ever recorded level, even below 2020. Most of this drop comes from restricted firms. That’s important because it’s the big restricted shops which tend to be the hungriest for new business.
- Speaking of restricted firms, 12% of firms are just that, but they generate 36% of sector revenue.
- Total revenues from investment business fell from £5.51bn to £5.34bn.
There’s loads more; dig in and have fun. We certainly will be. Our main TL;DR – when we did the Advice Gap research recently, we got a clear picture of firms hunkering down and protecting their existing book rather than extending advice services out to lots of new client groups, and this smorgasbord of statistics chimes exactly with that. So it’s a sector that’s not having an absolutely whizzo time, but equally not one that’s in trouble.
A parting shot: if 79% of sector revenue is from ongoing fees, it’s not daft to expect regulatory scrutiny to focus on that. You all know what that means.
And your music choice this week? It would be easy to give you some Finnish death metal and you’ll be pleased to hear that I’m newly replenished with a bunch of new bands to keep your ears bleeding for many weeks to come. But I’ll let you off this week, and instead give you a song from a record that kept me company on train trips through forests and lakes (the trains didn’t actually go through the lakes; that would be ridiculous and mechanically improbable). Please do enjoy the peerless Che Aimee Dorval with The Crowned. The whole album is brilliant.
