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A move in the wrong direction

I left Barclays just over a year ago having become disillusioned with its steer towards multi-tie. I have always been a believer in true independence, where customers are offered best of market.

I often wonder how companies such as Barclays are able to face customers. Certainly, from my own point of view, having bestowed the benefits of whole of market for the past 15 years, how could I adequately justify offering customers anything else, especially when, in the main, custo-mers have not been consulted?

Since the introduction of the concept of multi-tie, there have been various models of what it might look like, how it will benefit the customer and how it will operate and be managed effectively.

Of course, there are benefits to multi-tie. For companies previously single-tied, I think it is a move in the right direction but I am afraid I see it as a retrograde step for IFAs.

It is good news for customers who, in the eyes of the advisory company, do not need full financial advice and are able to buy what they need from just a few providers but I believe the majority will be disadvantaged.

First, who decides when a client requires full independent advice or simplified multitied advice?

Will the benchmark be on assets value, complexity of estate and so on? Major banks will inevitably try to filter clients through this process but how can they control an adviser targeted to sell multi-tied products from not passing on a referral to an IFA when the criteria are met? What happens to those customers who want an IFA but do not fit the mould or those who have previously got independent advice, only to be told that they do not really need that type of advice anymore?

How does an adviser rev-iew his old IFA clients and not be tempted to move their assets into the new multitied world?

If the bigger advisory companies are going to embrace the concept of a multi-tied app-roach, will they be advocating reviewing products sold by their tied salesforces to see if they can save the customer money if their plans are realigned under the new multitied companies? This whole issue of maybe multi-tied/ maybe IFA needs to be closely managed to ensure that service is in the interest of the customer.

Why are bigger companies going down the multi-tied route? Most would say it is because customers only req-uire simplified products from a limited range of top-flight providers but is this really the whole story?

The question of selection is an interesting one. Why put a particular company on your multi-tie panel?

Are insurance companies being selected on the grounds of good customer service and high-quality products available at competitive market rates or for their ability to increase company profits?

Depending on how multi-tie is implemented, who is the real winner? Well, the answer is (in the eyes of the FSA) the customer but in the eyes of the advisory company, profit. This is an issue that in an ind-ustry forever struggling to gain consumer confidence, (the move to multi-tie) may lead to further damage, especially once the wider press pick up the latest concept and what it means to consumers.

Let us not confuse the customer anymore than we do at present. Companies should either be multi-tied or IFA. The middle ground is too confusing and could lead to the next industry scandal, something that none of us want.

Finally, I wonder if advisers have been considered.

Increasing regulation in our marketplace means that IFAs strive hard to achieve the high exam standards required to meet the necessary levels of competency. How are advisers able to justify to themselves the hard work involved for it to then be sidetracked in favour of simplified products and increased profits?

My personal belief is that the best way to secure better profits is to look after customer needs, giving them what they want and offering advice from the whole of market. At Fluent IFA, this is exactly what we do. I educate hundreds of people every week at seminars about the importance of getting advice from fully independent advisers. I am so glad I made the move.

Chris Regan is managing director of Fluent Independent Financial Advisors


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