By Chude Chidi-Ofong, Advisory Board member, My Compliance Centre

One clear sign of the Darwinian struggle taking place in today’s economy is the relentless wave of consolidation in the independent financial advisor (IFA) market.

According to data from the Financial Conduct Authority (FCA), the number of firms authorised to provide retail investment advice fell from 5,805 in February 2024 to 5,473 in February 2025. This represents a significant six percent drop in the number of companies operating in just 12 months.

Larger firms and private equity-backed consolidators are aggressively acquiring smaller IFA practices, driven by the promise of assets under management and revenue potential. However, it’s easy for buyers to overlook one critical area that can affect ambitions to grow rapidly: the state of the target firm’s compliance processes.

Exit drivers: regulatory overload

A considerable portion of the IFA owners exiting the market today belong to a generation that has seen huge regulatory change over the past two decades.

Thanks to an increasingly complex compliance environment, including recent initiatives like the Consumer Duty, many older owners are choosing to sell rather than invest the time and resources required to adapt.

In my work in compliance, it’s become clear to me that these operators are finding themselves at a crossroads, and are asking: “Do I devote my time towards working this stuff out, or do I cash out?”

This regulatory overload, which is often accompanied by an understandable resistance to change among some seasoned practitioners, means that many firms up for sale are typically operating with outdated, manual compliance systems. Spreadsheets, paper files and fragmented processes are the rule rather than the exception.

The acquirer’s headache: integrating legacy systems

For acquirers, this is a serious headache. Integrating multiple firms, each with its own disparate and often archaic compliance processes creates operational risks, increases the likelihood of compliance failures and can act as a drag on ambitions to scale.

This is why acquisitive businesses need to prioritise modern, scalable compliance infrastructure. Without it, acquirers face a daunting task: manually reconciling data, retraining staff on legacy processes, and ensuring consistent adherence to regulations across a complex new organisation.

For those consolidating everything into one system, a unified technological solution that manages compliance across a unified entity effectively is a necessity.

The value of “oven-ready” compliance infrastructure

I’ve also observed how firms that have already invested in modern compliance technology are at an advantage – and this is true whether they are looking to acquire or be acquired.

For sellers, having an “oven-ready” compliance system can enhance the attractiveness of their firm. While we can’t claim that removing this pain point from your business will increase its valuation, it is going to make it very difficult for a potential buyer to subtract from the price of your IFA business due to compliance processes.

And for acquirers, using a platform like My Compliance Centre to consolidate and manage oversight across multiple entities is essential for scaling safely and efficiently. It allows for the standardisation of processes, centralisation of data and automation of tasks, releasing valuable resources and reducing operational risk.

In summary: technology is a key component in successful consolidation

The momentum behind the IFA consolidation wave remains powerful. However, businesses that wish to take advantage of this economic opportunity need to be mindful of the pitfalls associated with outdated compliance processes.

Whether you’re looking to exit seamlessly or are working towards an ambitious growth plan, the chances of achieving an optimal IFA exit or purchase will be greatly enhanced if compliance systems that have evolved to thrive in the modern age are in place.

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Advisers flock to profession but firm numbers fall as consolidation bites