More than half (53%) of advisers believe firms will shut as a result of the COVID-19 pandemic, while 45% expect more advisers to retire and 34% forecast a rise in the sale of businesses, new research from AKG is suggesting.

The independent analyst has predicted a shake-up of the advice industry even though it expects a rise in demand for financial advice – with the impact of COVID-19 a major driver for clients to seek support.

AKG’s paper, titled Future of Advice – Beneath and Beyond, suggested the pandemic is “accelerating changes that were already underway”, as demonstrated by the rise in M&A activity across the sector.

Customers questioned for the study were more than twice as likely to prefer face-to-face advice – with 55% preferring to see a person compared to 22% who would prefer to rely on technology.

The study also found the biggest barrier to consulting an adviser is that many consumers think they don’t need them – 43% of those who haven’t seen an adviser in the past five years believe they have enough knowledge to decide for themselves. Just 27% do not want to pay, the analyst added.

“It is difficult for advice firms to think beyond the immediate day-to-day pressures of responding to the massive impact that COVID-19 has had and is having,” AKG communications director, Matt Ward, commented.

“But they need to look to the longer-term and particularly when so many firms are expected to leave the industry at a time when advice is needed so much, and demand is growing.

“Intermediary distribution is the lifeblood of the financial services companies assessed by AKG and so a key part of our work in assessing the operational strength and sustainability of these companies involves close monitoring of the likely future shape of the advice market.”

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