UK financial advisers are showing continued signs of stress with an approximate 3,500 claiming they will leave the industry within three to five years.

This is up on the estimated 3,000 who stated their intent to leave over the same time frame in 2010, according to CoreData Research UK.

Although alarmingly perhaps for the sector is the fact that in addition almost one in four advisers (24%), are unsure what their professional status will be by 2014.

It is just over a year until the Retail Distribution Review (RDR) becomes fully incorporated into the financial services system, with some aspects of it still remaining unclear, such as whether older advisers (through grandfathering) will be able to avoid the strict new training standards required to continue practicing after December 2012.

Meanwhile in terms of adviser departures this year, if it is assumed that there are 25,000 active advisers working in the UK – then 750 alone plan to leave the industry before the end of 2011, while 1,000 are unsure if they will remain in their current role.

UK Adviser Professional Status (2011-2016)

Some 12 months ago, 15.0% were expecting to leave outright by 2015, 7.3% expected to change roles with their current employer and would no longer offer advice, 3.2% stated they would go to another employer (non-advice), while 16.7% were unclear of their future status.

From the end of 2012, firms will have to be upfront about how much they charge for their services, and no longer hide the cost of their advice behind the cost of a product.

In addition, firms will not be able to accept a commission in return for recommending specific products.  Consumers will know what they are buying upfront, how much it will cost them and also have the peace of mind that the product was recommended to suit their needs.

The changes also mean firms offering independent advice will have to demonstrate that their recommendations are based on a comprehensive and unbiased analysis of the market and that any product selection is made in their clients’ best interests.

However, if a firm chooses to limit its product range to certain investments or strategies, then the services it offers are restricted, and this should be clearly set out for customers.