Could COVID 19 be the tipping point for small financial services brokerages? (Sponsored)

May 14, 2020

There are approximately 2,000 licenced independent financial services intermediaries (brokers) in Ireland. These range in size from the small, proprietary, one-person firms to the large multinationals.

Compliance pressures

Brokers across the island of Ireland face increasing compliance costs, which in many cases threaten the viability of the business. While compliance is a necessary good in financial services, it is an increasing material cost in such operations.

Indeed, many Chartered Accountants are directly engaged in the financial services industry with the requisite authorisations to transact business on behalf of clients. The compliance obligations for members of the Chartered Accountancy profession, who also operate as brokers, have also increased in recent years.

Financial sustainability

For those brokers with scale, the capacity to absorb the costs of increasing compliance is more sustainable than their smaller contemporaries.

However, what might happen if the Irish market sees a significant contraction, as is already in evidence, in commercial and retail activity? What happens if companies close and, consequently, financial services activity begins to shrink quite dramatically?

The smaller broker has always tended to be comfortable navigating a market where recurring income is less than total overheads, the gap being filled each year through new business. What happens if there is no new business activity or a level of reduced activity that is essentially over-serviced by the very existence of 2,000 or so practitioners?

Significant consolidation

Having endured the decade-long hardship after the financial crisis, many brokers downsized and right-sized their operations just to continue in business. Those who could not redesign their operating models tended to sell their businesses to contemporaries “in the trade”.

This trend is likely to emerge again, but possibly on a scale not seen in this country before.

Broker Exchange Ireland – BXI


Isn’t it odd that when a person wants to buy some life assurance or set up a pension, they have around 2,000 options to get specialist and qualified advice?

However, if you are one of the 2,000 brokers in Ireland and you are considering buying or selling your business, where do you go for specialist and qualified advice?

BXI is Ireland’s only specialist firm of advisors in the mergers and acquisition arena for Irish brokers. We have unrivalled experience in valuation setting, deal navigation, negotiation and completion.

If you would like to talk to us about any of these issues relating to your own brokerage or clients for whom you provide accounting and auditing services, don’t hesitate to contact us at info@bxi.ie or www.bxi.ie

Shay Keane is the Managing Partner at Broker Exchange Ireland, BXI.

(This article is sponsored by BXI.)