Welcome to International Advisor

Sam Instone, managing director of international IFA AES, shares the results of a survey of advisers about the benefits of independence

Our recent survey of 40 international advisory firms showed 38 (95%) claimed to be independent.  In the UK this means a company has terms of business with the whole of market and conducts a fair analysis based upon the clients needs.  What then does this entail in the international market, in the absence of any effective international comparison software, established product analysis process or even a clearly defined (both geographically and by product line) provider marketplace?

The answer is probably not so much whole of market independence for the client but an independence from banks, providers or larger distribution corporations so that advisers and advisory firms can manage their respective client banks in the way they choose best.

There’s no question that today’s international financial advisers have more options than ever before when it comes to determining practice affiliations, focus, and revenue models. Each option and route to market whether through insurance wraps, platforms or direct investment comes with pros and cons that must be carefully considered in line with a range of complex factors.

The 38 independent firms stated the reasons for choosing to focus on international business were as follows: -

32%     (12)      Autonomy to make own decisions
29%     (11)     More attractive revenue models
18%     (7)     Less Bureaucracy
16%     (6)     Disliked regulation
3%      (1)    Better Product Offering
3%     (1)    Technical Specialists in this area

This doesn’t give the textbook answer that independence delivers the best possible client outcomes.  However, it probably is a realistic reflection of adviser motivation.   Additionally, other benefits may be possible to achieve through independence rather than through the bank assurance, tied or other common distribution routes.
 

Adviser

Advisers Clients

·         An career  free from proprietary products, quotas and incentives ·         A diverse marketplace  that lets you choose your area of interest and expertise ·         Improved long-term definable revenue ·         Freedom to decide how to best service clients ·         Choose what, how and when to charge clients for services rendered ·         Ability to build and market your own brand ·         Ownership and value accrual of your own business ·         Access to business-building and succession-planning resources targeted to your specific needs

·         Greater confidence in objectivity and quality of advice received ·         Enhanced services and technology ·         More face time with and access to advisor; improved Communication ·         Fees potentially in line with services rendered; greater fee transparency ·         Elimination of ethical or financial concerns about firm or corporate parent ·         Confidence in advisor’s long-term commitment ·         Cost-effective fees and appropriately priced services ·         Increased product flexibility ·         Experience consistency in servicing even after advisor retires

No matter what the motivation— compensation, firm culture, quality of life, freedom to call your own shots—making a change requires extensive market research and no shortage of self-reflection. 

It is likely that the first steps to independence may be both difficult and a very sharp learning experience.  However, once established the freedom that independent status delivers should mean international advisers have the opportunity to make their own calls in line with both the best interests of their clients and themselves!