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Categories:Advisers,Other

Rob Reid: What is the value of the independence tag?

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I recently spotted a headline which asked if St James’s Place and Towry Law could be the “last of the independents”, given the current melee over definitions.

Putting to one side the fact that SJP is not an IFA, the question needs to be asked once more as to the value consumers associate with the term independent and whether it is worth many firms jumping through the regulator’s latest hoops to retain this title.

I once said that the perceived advantages of IFAs could come back to haunt them, for example, the ability to research the whole market.

This is just not practical every time you take on a new client and yet it is often cited as a core advantage.

As a firm, we dropped the IFA moniker a while ago as it did not align with what we are about, in that we only do what we are competent to do. Before you all rush to blog, think of all the firms near you displaying the Unbiased symbol that offer nowhere near a holistic proposition.

How happy would you be for potential clients to think of your firm in the same vein?I once said the problem with with-profits was it was a generic term for a non-generic range of products. The term IFA shares the same problem and that is why chartered financial planning firms have the edge.

On another related issue, recent changes on the Hargreaves Lansdown execution-only platform were announced by its head of advice. If that is not taking the proverbial, I do not know what is. I have no problem with execution-only, indeed, I think we could all deploy it to some extent, but I do have a problem when execution-only and advice are mixed or used interchangeably to promote a firm.

Having taken on many clients from execution-only platforms in the last few years, it is clear that without exception they all referred to the firm operating the platform as their previous adviser.

Let’s have simplicity - advice or no advice, all the other labels just lull people into a false sense of security.

If we are going to get the definition for independent right, we need to rename execution-only as “no advice” and clients should have to sign that they understand the protection they are opting out of by taking this route.

Creating a unique proposition is not easy. You may criticise Towry and/or SJP but the truth is both are highly effective marketing machines and are two of the few scaled advice propositions that are working.

As this is my last column before Christmas, may I wish you all a peaceful and re-energising Christmas break. We certainly deserve it.

Robert Reid is managing director of Syndaxi Chartered Financial Planners

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Readers' comments (7)

  • Where is the consumer in all that you say? Yes Towry and/or SJP have highly effective marketing machines which they need in order to sell their over engineered over priced portfolios. They are the antitheses of what independent financial advisers need to look like in the future not an example! If advisers want to act truly in the best interests of their clients /customers then the only game in town in my view is to remain independent keeping highly effective marketing to others!

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  • The FSA has killed the 'independent' tag in dribs and drabs.

    The ending of polarisation dealt a mortal blow and the madness of the RDR adjustments is merely putting the independent beast out of its misery.

    One of the FSA principles is proportionality - "The burdens or restrictions we impose on the industry should be proportionate to the benefits that are expected to result from those burdens or restrictions".

    What a laugh.

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  • There is a strong rumour afoot that a recent Panacea Survey has created a regulatory firestorm. The survey claims to be the first “true” IFA consultation over RDR and the results promise to be a significant embarrassment to the FSA. The survey closes today at 5 pm but you can participate in it https://www.surveymonkey.com/s/rdrsurvey2011

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  • Robert does hit the nail squarely on the head-the "chartered" status is impressive but how do we assess "competent & caring competence?"

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  • There is a great deal of good sense spoken about the future shape of advisory businesses post-RDR. But adviser views are not changing. The Aim Two Three Big Survey had responses Fromm almost 500 advisers, most of them principals, and 93% still want to operate as Independents from 2013. 89% believe that they will operate as Independents. Our research suggests that far fewer (possibly 50%) will actually meet the new requirements for "independence" which means that there is still a lot of work to be done out there.

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  • I agree with Robert Reid's article 100%.
    Alan Lakey is quite correct in his statement.
    I don't refer to Independant in my business title, nor do I refer to "advice" in my own title.
    Clearly articulating the restrictions under which we all work, so that they describe what we do it going to be what people will be looking for post RDR.

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  • I often have the pleasure of agreeing with Robert, however on this occasion I am in disagreement.

    The article seems to me to be a re-run of the old Aesop fable of the fox without a tail.

    Of course I can only speak for my small puddle in which the inhabitants are well aware of and appreciate what Independence means. Moreover unlike so many others I am still happy to call myself an IFA. Yes I could use the term Wealth Manager of Financial Planner, but frankly I’m not that precious.

    I also get a little weary of people who fail to recognise that Chartered is not the only escutcheon of worth. Indeed the (true) CFP is both senior (in terms of longevity) and more internationally recognised. However this internecine squabbling is unworthy and we should in fact both recognise each other’s worth.

    In mitigation for Robert I know he is a ‘wheel’ at the CII – so does his duty in pushing their proposition.

    Anyway whether Chartered, Certified or merely aspiring – a very happy Christmas to you all and may we have a rather more peaceful and less fraught 2012 – although I’ll not hold my breath!

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