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Tide of change in Scotland’s independent financial adviser market
Ian MitchellPartner in the corporate law team at Lindsays, advised on a recent deal which saw Bishopbriggs-based Synergy Financial Planning acquired by AAB Wealth.
This is the latest in a series of deals in the sector where smaller companies have become part of larger groups, with Lindsays lawyers involved in several such transactions in recent years.
As compliance requirements increase, Mr. Mitchell expects consolidation activity to continue.
He said: “Across the IFA sector, we are seeing a lot of consolidation, driven in part by compliance changes introduced by the Financial Conduct Authority, including the customer-centric approach requirements of the consumer duty rules.
“As larger carriers review their portfolios and adopt new practices, there are likely to be further shifts in best practices within the industry when it comes to customer service standards.”
He added: “The advisers we work with have no problem meeting new standards in the advice they give. But the practical impact of new rules is that the administrative burden they bring makes it harder for smaller firms to manage, particularly from a time perspective.
“For many, particularly those with strong client portfolios, there is then a pull to consider relocating, often through mergers with larger rivals where greater compliance demands can be more easily absorbed.”
Synergy Financial Planning – founded in 2011 and led by an experienced financial planner David Neely – works with 200 families in central Scotland.
His team recently became part of AAB, taking the value of assets under advisement (AUA) to over £800m and his team to 37 people, operating across Scotland, England and Northern Ireland.
Mr Neely said: “We are delighted to have found a partner in AAB Wealth that reflects our own ethos of helping clients make the most of life.
“Thanks to the helpful, pragmatic and clear advice we received from Lindsays on the sale process, we were able to complete our deal with AAB Wealth, which will allow our clients to benefit from AAB’s support, while we continue to operate locally from our Bishopbriggs office. We are really looking forward to the future.”
An older age profile among some IFAs is also a driver of change across the sector.
Mr Mitchell said: “With years of experience and a solid client base, there are potentially greater benefits for smaller IFAs in reaching an agreement for their practices to continue rather than closing them down, particularly if you combine the compliance shift with the tricky issue of succession planning.
“In many ways, consolidation in the sector is natural and mutually beneficial, with owners looking to the next steps in their lives and ambitious operators seeking to increase their market share and achieve economies of scale.”