Lighthouse casts a shadow over health of financial advisers

LIGHTHOUSE Group, one of Britain's biggest financial advisory networks, yesterday warned that proposed new rules will drive many IFAs out of business, as it posted increased profits for the first half of the year.

The group, which has some 50 firms and 160 advisers north of the Border, reported a modest rise in gross profits to 8.9 million for the first six months of this year, up from 8.6m in the same period in 2009.

Revenues reached 32.6m for the interim period compared with 29.3m a year earlier. The interim dividend was raised to 0.12p from 0.1p.

Recurring revenues now account for a quarter of total income, up from 20 per cent last year, while new clients include Unison, the public services union, with a preferred deal to advise members on pension arrangements.

But some in the industry are under threat from new rules being introduced under the retail distribution review (RDR) at the end of 2012, which include higher qualification requirements and a ban on insurers paying commission to IFAs.

Alan Rosengren, joint chief executive of Lighthouse, said IFAs not making the appropriate preparations for RDR would face difficulties staying afloat.

"Members that are taking qualifications and have a reasonably strong recurring income base are going to be all right. Those that are not will struggle and there will be a general contraction in the sector," said Rosengren.

And as the sector shrinks there will be reduced access to financial advice, he argued. "The end result is fewer advisers, which is a retrograde step, and replacing fees with commission will result in advice being more expensive."

The firm's main operation in Scotland is Dunfermline-based network FSAS, bought four years ago by Sumus, which merged with Lighthouse in 2008.