In this instalment of our blog series, we’ll be asking the question which was taken from our recent YouTube video “What factors impact IFA Acquisitions?”
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Before we jump into today’s topic it’s important to first provide some context to the IFA Acquisitions market.
Over the last few years, the IFA Acquisitions market has drastically changed. Alex Canham a partner at Herrington Carmicheal provided some more context on this “One of the big things that we’ve all seen over the last few years is changes in regulation from MiFID and MiFID II, where we’ve seen an uptick in acquisitions and consolidation in the market, primarily as people look for new opportunities” and asked Gary Venner, Managing Director of IFA Acquisitions “Have more opportunities driven more activity and do you think those ongoing regulation will continue to spur consolidation?” which is the topic of this blog.
Has increased regulation affected demand for IFA Acquisitions?
Gary, in response commented “Without doubt. MIFID, MIFID II, Prod are all things that have increased the administration burden on IFA’s and particularly for sole trader IFA’s or small partnerships without much support where that responsibility has fallen onto the advisors. Of course, that means it’s more difficult to see clients or certainly to take on new clients and I’m aware that some vendors, particularly those nearing retirement, haven’t looked for new business purposely because of the thought of the amount of work involved in doing so. It definitely has increased the number of IFA’s that have made a decision to start looking at retirement and exiting the market”
Alex agreed, commenting “That’s consistent with what we’ve seen; people who are reluctant to take on new business despite there being an abundance of it out there for them, particularly where they’ve got a reputation perhaps in a particularly niche community or they look after to clients in a particular geographic area actually it’s that concern about being able to do the admin and the compliance that’s saying to them ‘no, I’ve just got to keep what I’ve got now’ despite actually wanting to take on more”
In conclusion, it’s clear to see that increased regulation has affected supply and demand for IFA Acquisitions due to the new opportunities. Although these new regulations have presented new opportunities, they have also presented some unique challenges such as delays in change of control permissions by the FCA which can slow down regulation in other ways too.
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