An overhaul of IFA business models is in the pipeline, advisers have suggested, with the advent of new EU rules looming.

A survey of advice professionals indicated MiFID II is likely to encourage IFA firms to review their businesses with the aim of becoming more efficient.

The new Markets in Financial Instruments Directive is due to apply from 3 January 2018.

Over half (52%) of advisers surveyed believed the additional regulatory and compliance demands resulting from its introduction would be likely to prompt such a re-evaluation.

Investec Wealth & Investment’s study showed 52% of intermediaries believed adviser firms are most likely to review and change their compliance functions in light of MiFID II in order to provide greater transparency. Fee structures was second on the list at 42%.

MiFID II will encourage IFAs to de-risk their business by reviewing their level of professional indemnity cover, according to 38%.

A third of advisers predicted the changes will lead to greater use of Discretionary Fund Managers.

Mark Stevens, head of intermediary services at Investec, said: “MiFID II is the latest in a series of regulatory changes and it’s no surprise that it has prompted many IFA owners to conduct a root and branch review of how they run their businesses.

“For some adviser firms, MiFID II will act as a catalyst and lead them to create a more efficient business model. As part of this, we are likely to see more firms outsourcing their investment management requirements to specialist discretionary managers. This will provide them with the bandwidth required to grow their businesses in a post Mifid II world.”

The research underlined how the introduction of MiFID II comes at a time when advisers are occupied with the consequences of Brexit.

Almost one in four advisers (24%) reported that Brexit has prompted clients to take a greater interest in their portfolios, while almost half (47%) said clients are seeking more advice about how to protect their portfolios from post referendum market volatility.