Increased consolidation across networks is a direct result of the regulator wanting fewer firms to manage overall, according to Rachael Fennessey, company director at Aspire Executive Search.
Speaking on the latest FTAdviser podcast, Fennessey said she “feels for the owners of networks” with the ever-changing landscape in financial services at the moment.
The FCA said intervention from the regulator has seen the number of ARs decline in recent years.
The Financial Conduct Authority’s annual report and accounts for 2022-23 revealed that there has been a 19 per drop in the number of appointed representative firms in almost three years.
“The regulator wants less firms to manage so the logic is there as to why it's happening but it’s a very changeable market,” Fennessey said.
This comes as last month, Tenet announced it will close its network, with its appointed representatives moving to The Openwork Partnership as part of an exclusive agreement with the company.
The agreement will provide Tenet's firms and advisers the choice of retaining their independent status through Openwork's IFA business 2plan Wealth Management or becoming part of the restricted Openwork proposition.
Emma Napier, consulting director at NextWealth, who was also on the podcast, said: “We've been along a road for some time where networks are concerned, but I do think there is a consequence of the mergers and acquisitions in the market and how advisers are feeling about regulation.
"It just feels to me that it is a time of considerable change generally, but actually in respect of advisers themselves it's a good time to make a change."
She also explained that controlling the network that's making all the rules and monitoring those advisers is becoming increasingly difficult when there is so much change.
“There is a movement of advisers that are being swallowed up by the larger firms in terms of the consolidation that is going on at the moment. Those large firms are also equipping themselves to be able to attract new talent or manage existing talent through their own network,” Napier said.
“Do I call it a network or is it just a national firm? That’s the difference, I don't know where networks stop and national firms take over these days because they're doing the same thing.”
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sonia.rach@ft.com