Barry Read's IDS has agreed to merge with Strategi which is run by David Greenslade, and will operate as part of Strategi.
Read said, from next month, IDS would merge with specialist adviser training, compliance and consultancy firm Strategi.
He said Strategi had the scale, resources and systems to help take the financial advisory industry into the new age of technology and professionalism.
"We are aligned in our thinking and values, so for us it was a simple decision to make. The IDS name will be replaced by the Strategi name, but other than that, it is ‘business as usual’ and there will be no interruption to the high level of service you expect from our people."
Read said that the next two years will be stressful for many financial advisers, advisory firms and networks as they transition into the new licensing regulatory regime and develop their business models for the future.
"We looked going forward at the resources we would need to get clients through the next lot of changes and it was hard to find the right resources," he said. "It would have required another level of investment."
It had been hard to find the right staff to fill IDS roles.
He said a lot of his 700 clients were already dealing with IDS and Strategi, anyway.
He said not a lot would change for his role and he would still take the lead on most of the work for financial advisers, while Greenslade would focus on the corporate end of the market. "It just means we have a bigger team behind us for the work I do with clients. The goal is to get each client through the next two years so they continue to be there in whatever shape or form that ends up taking."
Financial advisory firms will need to rationalise their business models over the next 12-24 months in order to thrive and we will see more consolidation and mergers to obtain efficiency and scale.
Read said the IDS/Strategi merger is all about capacity and cost-effectiveness.
"Strategi has put a lot of work and investment into new technology - in order to deliver compliance and adviser training services at an affordable price. Yet at the same time we are both mindful of the trends that have seen compliance costs rocket in similar markets overseas. The bogeyman for many compliance companies is fragmentation, which causes duplication of resources and increased cost."
"With this merger, the intention is to use the two companies’ combined expertise, staff and systems to meet the needs of all segments of the advisory industry, while at the same time helping to keep adviser compliance costs to a minimum."
He said some of IDS's services, such as individual adviser advice process reviews, would have had to change as the industry moved to entity licensing, anyway. Some of the services currently offered for individual providers might be picked up by the licensed Financial Advice Providers they worked for in future, he said.
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