Tide of change in Scotland’s independent financial advisors market

It is the latest in a series of deals across the sector which has seen smaller firms become part of larger groups, with Lindsays lawyers involved in a number of such transactions over the last couple of years.

With increasing compliance requirements coming into play, Mr Mitchell expects that the consolidation activity will continue.

He said: “Throughout the IFA sector we are seeing quite a bit of consolidation, driven in part by compliance changes being introduced by the Financial Conduct Authority including the customer-centric approach requirements of the Consumer Duty rules.

“As the largest operators review their portfolios and adopt new practices there is likely to be further changes to best practice within the industry when it comes to the standards for servicing of clients.”

He added: “Advisors with whom we work have no issue reaching new standards in the advice they give. But the practical impact of further rules is that the administrative burden they bring makes it harder for smaller firms to manage, particularly from a time perspective.

“For many, particularly those with strong client portfolios, there is then an attraction to consider change, often through mergers with larger rivals where greater compliance demands can be more easily absorbed.”

Synergy Financial Planning – established in 2011 and led by experienced financial planner David Neely – works with 200 families across central Scotland.

Its team recently became part of AAB, taking the value of assets under advice (AUA) to in excess of £800m and their team to 37 in number, operating across Scotland, England and Northern Ireland.

David Neely said: “We were pleased to find a partner in AAB Wealth that reflects our own ethos to help clients get the most out of life.

“Thanks to the helpful, pragmatic and clear advice we received from Lindsays on the sale process, we have been able to conclude our deal with AAB Wealth that will allow our clients to benefit from the support of AAB, whilst we continue operating locally in our Bishopbriggs office. We are really looking forward to the future.”

An older age profile among some IFAs is also a factor in sector-wide change.

Mr Mitchell said: “With years of experience and a solid client base, there are potentially greater benefits to smaller IFAs in reaching a deal to have their practices continue rather than wind them down, particularly if you couple changing compliance with the tricky issue of succession planning.

“In many ways the consolidation in the sector is natural and mutually beneficial, with owners looking at the next steps in their lives and ambitious operators seeking to increase their market share and achieve economies of scale.”