The study, sponsored by Aberdeen Asset Management, called “The king’s new clothes” found that advisers have very different aspirations to those of the national firms and networks they represent
Specifically, the research revealed that nearly nine out of ten (88%) advisers intend to retain their independent adviser status post the Retail Distribution Review. Conversely, 70% of national IFAs and networks intend to offer restricted advice propositions after the RDR is in place and furthermore, 75% of major national IFA firms and networks said they expect most of their members will become restricted advisers.
Clive Waller, head of CWC research, said: “What is emerging is a dual track for the destiny of financial advisers. Advisers’ plans for the future are clearly not compatible with what their bosses have in mind. On talking to business managers the momentum is shifting towards a restricted model of financial advice, with lower costs and less risk, whilst advisers are still nailing their independent colours to the mast. Something will have to give.
“Either firms are going to need to go and recruit and train a new restricted breed of adviser, or advisers are going to need to give up their independent standing. What our evidence suggests is that the pragmatism of advisers will prevail.”
In support of his believe that “pragmatism will prevail” Waller said 70% of advisers said they will reconsider “throwing in” their independent credentials if the offer was good enough and the move was to a restricted whole of market status.
However Waller added: “Some whole of market restricted propositions will be far wider than many IFA propositions today. However, it is inevitable that, whilst these terms have become familiar to the profession, much of the investing public will be utterly confused.”
Steve Young, commercial director of UK-based IFA network, Sense Network, agreed with the findings. He said: “We have been canvassing our members’ views and the overwhelming response has been one of commitment towards independence and rejection of any kind of restricted multi-tie. Some advisers are nervous of riskier products such as Ucis, VCT and EIS and may consider what we term “whole of market restricted” but they are also cognisant that there are some major drawbacks to any restricted model such as loss of professional connections and a reduction in professional status.”
“Underlying these results is a deep suspicion of the motives of the large Nationals and Networks who, seeing the commercial advantages to them of multi-ties, are preparing a sales assault to convince IFAs of the somewhat nebulous benefits for the adviser. Ultimately, the vast majority of advisers take pride in trying to do the right thing by their clients and for their clients, independent advice is the right choice. And, at Sense we both respect and agree with their stance.”
