The Woolwich's announcement last week on expanding its IFA operation to almost 500 advisers has created one of the biggest independent salesforces in the UK.
Networks aside, it is estimated that the bank's salesforce now weighs in as one of the five biggest in the UK with 480 advisers, only lagging behind heavy-hitters such as Bradford & Bingley, which has 600. Woolwich's move makes it a major player in the IFA market but only if networks are excluded from any comparative lists.
The assumption of lumping networks together in their own category because they comprise hundreds of small businesses obscures the story.
The issue is whether a loosely linked network of IFAs effectively constitutes a single salesforce or whether the criteria should be that IFAs must all work for the same firm under one brand.
IFA Promotion chief executive David Elms says: “I would not differentiate. In terms of regulation, they are both very similar, particularly with regard to training and competence. Whether in a network or national salesforce, advisers must give a competent level of advice and answer to the same regulator if they fail to do so.”
Although Elms does not perceive a distinction, the networks are falling over themselves to distance their IFA operations from those of providers such as Woolwich.
Misys, comprising four networks, is the biggest IFA service in the UK with around 4,200 RIs. Head of marketing Andrew Bedford says: “Networks are not salesforces, they are simply a collection of IFAs. If you suggested to an IFA of a network that he was part of a salesforce, you would get your head ripped off.”
DBS, Misys' nearest network competitor, agrees with this view although public relations and communications manager Sue Lewis believes Woolwich is “misdirected” in labelling its independent advisory service a salesforce.
Lewis says IFAs deserve recognition for their role as financial planners but believes there is a fundamental difference between the salesforces of providers with sales targets to meet and network IFAs, who are under no such pressure.
She says: “In any analysis of who has the largest number of IFAs, we would want two separate lists. I do not believe sales and advice should be mentioned in the same breath.”
But the chasm between networks and salesforces may not necessarily as big as the networks would have us believe.
Some networks are believed to be keen on bringing their members under one umbrella brand, a move which some IFAs outside networks claim would go a long way to render much of the distinction between salesforces and networks irrelevant.
Syndaxi Financial Planning principal Robert Reid believes the level of autonomy that network members pride themselves on is diminishing by the minute. He says: “A trend is developing where the networks are trying to take greater control of their RIs. The only thing left that really maintains a distinction between them and the salesforces is individual branding.”
He believes networks looking to impose a universal brand on members are holding back from doing so until after the details of the polarisation review are revealed. Until then, the networks will continue to rule themselves out of comparisons with provider salesforces, allowing Woolwich to claims it has one of the UK's biggest independent salesforces.
The bank thinks the networks have made a mistake in not bringing member firms under one brand. Director of IFA operations Dawn Johnson says: “The networks have definitely missed a trick in failing to brand their members but they could only do it if branding would add value to the individual firms.”
But it is not only a battle between networks and provider salesforces.
National IFAs such as Inter-Alliance also consider themselves to be operating in a league of their own. Inter-Alliance, the UK's biggest national IFA with over 1,400 advisers, shuns comparisons with networks and salesforces but admits to “watching the market avidly” for any potential challengers. It is set to increase its members further through a deal to bring over many of Pru's salesforce.
Spokesman Charles Ansdell says: “We do not believe anyone has moved on to our radar just yet because competitors would have to catch up with us in terms of economies of scale in brand and technology.”
Misys dismisses comparison with other forms of IFA organisations and uses a similar argument as Inter-Alliance to explain its confidence in retaining its mantle as the top network for years to come.
Bedford says: “I do not see anyone up and coming in this business purely because it is very difficult to become a big player. DBS, our nearest equivalent, is the one to keep an eye on but I would say we have nobody in particular to worry about.”
DBS says there is no comparison because it belongs in a different category. Lewis says: “We would say we are the largest network in the country. Misys is big but its four networks do not operate as one.”
But the market is changing, with increasing numbers of the direct salesforces becoming IFAs. There will be issues about how sales-oriented this generation is. Some are optimistic about these developments.
Aifa director of public affairs Tracy Mullins says: “IFAs come in all shapes, sizes and packages. How the advice is delivered, as long as the IFAs are competent, is a matter for the industry. Just as IFAs differ, there are different sorts of customers looking for different kinds of advice.”