For those in the investment industry, Ian Russell has some good news and some bad news.

In his latest industry newsletter, the president and CEO of IIAC says that industry profit in 2017 was better than expected, driven by strong retail performance. The bad news, however, is that earnings were uneven, skewed to large integrated firms and mid-sized self-clearing firms.

“Small and mid-sized independent dealers have fared the worst, with nearly 50 firms succumbing to difficult conditions and withdrawing from the business in the last five years,” says Russell. Challenges have included rising operating costs, weak resource markets and poor investment banking conditions in the small- and mid-cap corporate sector.

He expects more of the same over the next couple of years. “The industry will continue to consolidate around the firms that have stayed profitable through the period […]. It will be a lean and resilient industry that eventually emerges, but one that will be smaller.”

His letter details last year’s retail revenue, as well as “massive transformation” as firms shift to fee-based products and as online platforms expand. Referring to the latter, Russell says, “The online advisor is not a substitute for a trusted investment advisor.” That’s because many clients see advice as “holistic and integral to the investment process.”

Read: What happens when advice breaks up with investments

Structural change in the industry will remain an overarching theme, says Russell. Not only will that change come from firm amalgamations and withdrawals but also from the pressing need to adapt financial technology to expand product offerings, improve efficiencies and broaden reach through digitization.