E&Y predicts drop in financial adviser companies

The number of financial adviser firms will shrink to 10,000 by 2013 as firms
attempt to comply with Financial Services Authority proposals in the Retail
Distribution Review, Ernst & Young says.

An E&Y report warned that IFA firms are threatened by new rules set out
in the review, along with the ongoing fallout from the financial crisis.

The cost of better quality advice for consumers in the long-term will be a
big reduction in the number of qualified advisors in the short-term, the report

The FSA estimates that nearly 20 per cent of financial adviser firms are
loss-making and that a further 24 per cent have profit margins below five per
cent of turnover.

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