Midland financial advisers have been warned that up to a third of firms in the sector could face consolidation – with many one-man businesses struggling to survive.

Nick Platt, financial planner and director at Sutton Coldfield-based Henwood Court Financial Planning, said the onset of the Retail Distribution Review from January 1 would bring a major shake-up to the sector.

And he warned of a ‘rocky ride’ for firms which had not prepared for the review, aimed at making the financial services sector more transparent.

“This is a big change," he said. "It will make IFAs fee-based, which is long overdue in my view.

"There are 30,000 IFAs in this country and I do not think it is an exaggeration to say a third are going to disappear or be restricted – they will specialise in one area, say pensions or investment.

"IFAs have had a number of years to prepare for this – investments, pensions, typical wealth management products will be fee-based. Firms have had a number of years to prepare but you may see businesses that have not made the transition early enough struggle.

"The vast majority will have prepared for this and converted to a fee-based model.

“But it will affect those organisations that have been reliant on commissions. Jobs will be put at risk and nearly a third of firms could be the subject of some sort of consolidation.”