Lifetime has, this week, acquired Wellington-based Meridian Brokers, a deal Stephens said was largely driven by the new regulatory environment.

“I really do question the viability of a sole practitioner being able to economically operate going forward,” he said.

“After July last year, the market changed and we needed to change with it. Having a larger capital base provides greater strength and financial capacity.”

Stephens said that while scale is increasingly important, there was also an increased need for a wider range of skills.

“Identifying synergies in other successful financial advisory businesses and focusing on the different skills and knowledge each can bring to a new, larger combined organisation, is the future,” he said.

“We’ve got a very much best practice model, but there’s other businesses out there working to best practices of their own and we both learn together.

“With Meridian they bring a totally new set of skills to what our existing guys do, because they’re specialists in the group market, for instance.”

Plus4 Insurance chairman Grant Uridge agreed that regulation would drive adviser consolidation - especially amongst AFAs.

“I think it’s inevitable that it does, though it depends whether you’re AFA or RFA. The RFA seems to have had an out, there’s a level of professionalism in being an AFA and the back office requirement is that much higher,” he said.

“It’s inevitable that you look to consolidate the backend at least.”

He said that so far the Financial Markets Authority (FMA) had only inspected AFAs and that when the regulator started checking RFAs, that may act as a spur to consolidation in that space.

“They [RFAs] should be operating to the principles of the Code, should be quasi-AFAs,” he said.

“I don’t think they understand that.”