Research by Deloitte has found that over five million clients may be left without advice as a result of the retail distribution review (RDR), as costs are made transparent and IFAs focus on higher-net-worth customers.
Deloitte's report said the regulatory changes and their impact on the advice market would leave five and a half million clients orphaned or without access to advice.
It said: ‘These changes mean that there will be five and a half million disenfranchised customers who will either choose to cease using financial advisers or lack access to them.
'These customers, who account for 11% of UK adults, will represent a significant post RDR advice gap.’
The survey, which canvassed over 2,000 UK adults, showed that 46% of adults that bought savings and investment products over the last three years did so through financial advisers.
The research showed 87% of bank adviser clients believed the advice process was free and in the future less than 2% of customers who have taken multiple forms of advice would be willing to pay a one off fee of £300 or more to an adviser.
According to the research 33% of adults with less than £50,000 in savings, and 32% of those with more than £50,000, indicated they would cease using advisers for all products if they were charged directly.
Deloitte also found 27% of individuals were likely to opt out of advice and 32% said they would rather do their own planning, research and administration, as a result of the RDR.
While the mass market stands as the most likely to exit with 2.4 million people expected to stop using an adviser, 2.5 million mass affluent customers were also predicted to exit the adviser market, alongside 600,000 affluent clients.
IFAs were still in a good position, said Deloitte, since they tended to occupy a more upmarket space servicing clients with cash savings of more than £100,000.
Customers with more than £50,000 in savings were twice as likely as those with less than £50,000 to continue using financial advisers, the study reported.
It said: ‘This reflects the fact that the opportunities rising from good advice, and the costs from bad advice or not taking any advice, can rise in line with the size of a customer’s investment.’