Across the financial services industry, the consolidation of smaller businesses is a recurring theme.
Last month, it was announced that banking giant TSB would be absorbed by rival Santander, seeing another household name wiped from the high street.
Following the news, SuitsMe chief executive Matthew Sanders warned that banking consolidation was steadily eroding consumer choice and innovation.
We expect the 2024 trend to continue, with a slowing in number of deals but the value of deals growing
“Each acquisition means fewer voices at the table, fewer approaches to serving customers and, frankly, less pressure on the big players to actually innovate,” he told BBC Radio 4.
Fewer advice firms
The financial advice sector is no exception to this pattern of consolidation playing out across the industry.
There are nearly 1,000 fewer advice firms in the UK than there were at the beginning of 2022, data shows, with consolidation playing a key part in this trend.
The figures, obtained through a freedom of information request sent to the Financial Conduct Authority by Begbies Traynor, found that the total number of UK advice firms was 5,304 in the third quarter (Q3) of 2025, a 15.6% drop from 6,283 in Q1 2022.
The culture of a consolidator rarely matches the independence and autonomy that drove the original business
A relatively new advice consolidator, Finli, demonstrated this year just how rapidly firms could disappear. The private equity-backed consolidator managed to acquire 11 small advice firms in the space of just four months.
While consolidation in the advice sector started with smaller IFAs being snapped up, consolidators have even started buying other advice consolidators, leading to an increasingly monopolised market.
In December last year, advice giant Titan Wealth bought consolidator IWP, which had itself already bought more than 30 advice firms.
But what does the shrinking market really mean for the clients of these firms, and is this direction of travel set to continue?
Benefits of bigger firms
While consolidation is viewed negatively by many in the advice sector, experts say there are some benefits for clients and advisers.
First, larger firms create economies of scale, which could potentially result in reduced fees for clients, although there is little evidence to suggest that this has happened so far.
Something fundamental about service standards gets lost in translation when private equity enters the room
As I explored in a recent Spotlight feature, larger firms can also be a safer environment for advisers to work in. Smaller firms can often lack oversight while larger firms need to have more structure and demonstrable processes.
Concerns around consolidation for clients
However, a lot of advisers are concerned that consolidation spells bad news for them and their clients.
Many IFAs take pride in their independence and their unique selling point, and being consolidated into a larger business could take away those aspects, leading to less choice in the market.
It can be months of due diligence, talks, system migrations and clashes
Anita Wright, an independent financial adviser and founder of Anita Wright, says she has also seen many clients left out in the cold after their adviser has been consolidated.
“From where I sit as an adviser, I see both the upside and downside of consolidation, but the reality is that the negatives are starting to outweigh the positives for many clients,” she says.
“In the last year alone, I’ve taken on at least half a dozen clients who have been left stranded following their adviser’s exit to a consolidator. Their stories are all similar: they couldn’t get calls returned, they didn’t know who their servicing adviser was, and emails went unanswered.
“That tells me that something fundamental about service standards gets lost in translation when private equity enters the room.”
‘Exhausting for sellers’
It’s not just clients who are feeling the impact of consolidation. Wright says the process is becoming “exhausting” for sellers that go through the consolidation process.
“It can be months of due diligence, talks, system migrations and clashes. Many walk away surprised by how little their life has simplified,” she says.
Each acquisition means fewer voices at the table, fewer approaches to serving customers and, frankly, less pressure on the big players to actually innovate
“The culture of a consolidator rarely matches the independence and autonomy that drove the original business.”
What next for consolidation?
While the industry may be growing tired of consolidation, the practice doesn’t look likely to end soon, but we may start seeing more large names being bought up, just like in banking.
Research by NextWealth found the pace of deals had slowed slightly earlier this year, but the value of deals had risen – potentially reflecting a growing trend of consolidators buying other consolidators.
The research also found that private equity remained deeply invested in the sector, with more than 30 private-equity firms eyeing exits or ‘roll-ups’ (consolidators buying consolidators).
I see both the upside and downside of consolidation, but the reality is that the negatives are starting to outweigh the positives for many clients
NextWealth managing director Heather Hopkins says: “We expect the 2024 trend to continue, with a slowing in number of deals but the value of deals growing. An increasing number of private-equity firms will look to exit positions and we’ll see the rise of consolidation of consolidators.”
However, this trend could leave space for smaller firms with a unique offering to step up and fill the gaps left behind.
Laura Purkess is a freelance finance writer
