Greying independent financial advisers can no longer rely on the sale of their practice to provide a nest-egg pension for their retirement, according to research by City “marriage broker” Seer Group.

The sale value of portfolios has crashed to less than half of what they were in 1997 and are 25% less than the book value of general insurance brokers.

A typical firm of three IFAs would generate about £200,000 per year.

But it finds the best small IFA practices can only expect to obtain a maximum of 80% of one year's commission income.

The figure is likely to be 50% if the premium income is generated from only a few clients because of the high risk of a client walking.

Many IFAs have also seen the value of their book diminish because of the pension “mis-selling” scandal of the 1990s, which resulted in them having to pay remuneration.

Seer's Jeff Bailey said: “The IFA market has not so much contracted as withered.

“There are huge problems for the one, two, or three man bands who are looking for a pension at the end of their career.

“At the moment general insurance brokers are considered to be in a far better position, because regulation is limited and there are none of the spiralling costs of levies and compliance.”