The influence of product providers in the IFA sector is diminishing ahead of depolarisation.
That was the message at a round table last week, at which marketers said they believed the control that providers had exerted up to now was waning and IFAs were developing their businesses without their help.
Punter Southall Financial Management managing director Arthur Allison said that after looking at the way that markets had developed in Australia, providers would return to tied salesforces after depolarisation.
Allison said: “The providers will play a less important role with IFAs in the future. I think a lot will start tied salesforces again. That is exactly what happened in Australia. Distribution is that important to them.”
He said there will be less involvement from providers in a smaller IFA sector that will provide its own services for clients. He added that providers would focus commission and services on their own tied salesforces or multi-tie partners.
Allison said his firm's advi-sers now passed investment products such as bonds on to discretionary fund managers.
Without so much help from providers, the panel thought IFA marketing departments would have to work hard to differentiate independent status from other distribution models.
IFAs said providers needed a radical rethink about marketing material and suggested that money spent on “benign and tedious” mailshots would be better spent on offering other services such as helping IFAs set up websites.
Bestinvest head of marketing Justin Modray said some of the listed IFAs appeared to be losing money because their only marketing strategy was to get as many advisers as possible into the company.
Equal Partners managing director Vivienne Starkey said she did not believe the insurance companies would continue to bail out failing IFAs and thought the Bankhall and Tenet models were more robust.
Sesame is to shun graduates and focus its recruitment strategy on hiring older people in the future.
The firm's marketing director Stuart Gitsham told the round table that the group would focus on recruiting staff with experience of working in the financial sector.
Gitsham said the group had found that clients preferred to have an adviser who was close to their own age rather than a young graduate.
Sesame is following in the footsteps of employers like DIY retailer B&Q, which recruit older people who are looking for a second career.
Gitsham said: “B&Q has the right idea. A lot of people are going to want a second career, that's where the talent is and we are aiming for these people. These are more loyal people with life experience.”
Bestinvest head of marketing Justin Modray said: “This industry has traditionally attracted people who want to buy a Porsche or make a quick buck. We do not want to continue that and need to look at presenting ourselves more professionally in the way accountants or solicitors do.”
The panel also discussed whether multi-ties would offer a career path into the industry for new recruits who wanted to train as IFAs. A number of IFA firms have already said they would train new advisers by letting them work in the tied side of the business first.
The round table panel estimated that the cost of training an adviser to FPC level 3 is around £8,000.