Death of the small IFA?
Small and medium sized firms will find it increasingly difficult to operate in the future, said Stockton, because they would find it hard to keep up with fast evolving and expensive technology.
However, he did not predict the death of the small IFA just yet. "It's going to take an awful long time for the death of the [small] IFA because you've got recurring revenue.
"I think it's more about what the small and medium IFAs want to do in the future and how they they want to go forward. It is extremely difficult for a small IFA to comply with all of the things the FCA, the FSCS, and where things are going...and professional indemnity insurance has made it extremely difficult for new entrants to join.
"So it's hard to see new small IFAs joining the fray."
There was no compelling reason for small firms to exit now though, as long as they can keep up with the regulatory requirements, he said.
"But the fact of the matter is that over the next five to 10 to 15 years, there will be a smaller number of larger scale businesses who can afford to invest in technology and who can afford to invest in compliance and risk resource. But if you're a small business, that's very difficult."
Stockton looks to the insurance industry as a proxy for what is going to happen in wealth management.
The insurance industry has seen a number of very large consolidators emerge, and this is already partly mirrored in wealth management with the likes of Tilney, which merged with Smith & Williamson, now rebranded to Evelyn Partners.
Stockton believes there is "sufficient capital for between 150 and 300 deals a year, and that will carry on now for the next, certainly the next four to five years."
And there could be super-mergers down the line, he said. "At the moment there are so many opportunities and so many possibilities for acquisitions that the consolidators can probably carry on pretty much as they are for the next five to 10 years and then merge up together, or you could merge up together in the next three to five years and move forward."
Restricted businesses in demand
Stockton said there was no shortage of sellers and no shortage of buyers, which meant the acquisition market was dynamic.
"It's a good time to sell as well as to buy," he said. "Good time to sell because obviously your end of 2021 results are going to show your retail revenue probably a little bit higher than it is now, because of the way the equities market has performed in the last six months.
