Advisers share their tips and experiences in finding the right network
There are many benefits of being an appointed representative but choosing the wrong network could cause havoc for a business. Here, three advisers share their tips and experiences.
An open mind
Simplified Money director Lesley James considered going directly authorised when setting up the business in 2016. However, she felt that, as a start-up, having the support of a network would be the quickest and most efficient way of getting it to market.
“I spoke to three or four networks overall,” says James. “A couple had great reputations but when I spoke to one of them, I was told ‘this is how we do business and this is what it will cost you’. But what about the way we want to run our business?
I also found out later that there
was another fee on top of the one it had disclosed.”
On the advice of a fellow adviser, James joined The Online Partnership because, rather than imposing its way of doing business, the focus was on what she wanted to do with hers.
For James, the key to choosing the right network is to speak to people you know in the industry who have been through it already, and do not be swayed by your own perceptions of any before you have had a conversation with them.
“Find out for sure what’s going on at a network and be prepared to change your perceptions, as they can surprise you on the upside as well as the downside. I completely understand why people like the freedom of being directly authorised, but being tied to a network will not tie you down in the way you might think if you go with the right one,” she says.
Relationships are key
Arch Financial Planning became an appointed representative after 23 years of being directly authorised. The firm’s director, Arthur Childs, says the decision was linked to the need to secure the future of the company and the personal requirements of its owners.
“We had explored the options of a family succession and employee buy-out. We also determined that a sale to another IFA firm would destroy our business and not release sufficient value for us as owners. As the managing director, I was spending far too much time on non-client work and was reticent to hand over the reins to a stranger who would initially be a drain on the business,” he says.
The firm started out with the Best Practice Network in 2013, then moved to Flying Colours last year.
“We already knew what a good network looked like in Best Practice and found that Flying Colours ticked all the same boxes with a number of additional ones we had not thought of previously,” says Childs.
“The back-office customer relationship management system is excellent, as is the compliance support.”
Childs now spends the majority of his time talking to clients. “Many of my long-term clients are now being looked after by younger advisers in the company and I am enjoying the freedom of meeting potential clients,” he says.
So what words of wisdom does Childs have for other advisers looking for a network?
“Avoiding the wrong network is vital for your business,” he says. “The key is your relationship with the chief executive and his or her leadership team. That is where loyalty is bred both ways and that will overcome any difficulties, which are bound to come along the way.”
Check the exit terms
One of the reasons Susan Hill Financial Planning director Susan Hill joined TenetConnect rather than become directly authorised was because her work tends to be more complicated, higher-risk areas such as pension transfers.
“The age group I work with is 55 to 60-plus, in the areas of pension freedoms, DB transfers and post-retirement benefits. Having a network gets through all my compliance and makes sure I’m doing everything right – and I’m not interested in things like Gabriel returns,” she says.
“Of course, I have to pay Tenet but it allows me to be independent and there is nothing I need that I can’t get with Tenet.”
Hill chose Tenet due to the quality of its compliance department, the accessibility of its team of experts and the way it helps advisers understand what good practice looks like.
Her main tip for those thinking of joining a network is to carefully check the exit contract before signing up. “When I left my previous network, I didn’t realise I would be paying £1,500 a year in run-off cover indefinitely. You need to know that, if you ever wanted to move on, how do you get out of it and can you take your clients with you?” she says.