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Calling time

One of the biggest timecharging IFA firms in the country is setting its watch for a change in the better than best legislation, counting down to 2003.

Advisory & Brokerage Services, with a £5.02m turnover, is ranked 49th-biggest IFA in the UK by Matrix data. Following its purchase by Aegon in Aug-ust, it is now looking to expand from 30 RIs to 60 in the next three years.

The immediate cash injection means it will be able to take on five privateclient advisers in the next six months. This month&#39s new addition is Ian Howe from Towry Law, appointed as executive director. He will be responsible for financial planning.

So, why after more than 40 years standing on its own two feet did Advisory & Brokerage finally decide on a deal with one of the world&#39s biggest insurance companies?

Chief executive Gareth Marr vehemently denies that the move was a shift towards multi-tying and insists the firm will retain its independence. He says: “There is no way we are becoming tied.”

The FSA better than best rules mean A&B is now virtually unable to sell any Scottish Equitable products.

Marr says: “It looks like a brave gamble on Aegon&#39s part. Rather than gaining more trade through us, it is losing a large chunk of Scottish Equit-able business but as a result of the deal, it will gain a big cut in the UK distribution market.”

Marr believes the deal is a particularly confident move from Aegon, already a distributor in the Nether-lands and the US, because most firms are battening down the hatches and cutting spending.

He says: “The jury&#39s out over whether Aegon will make a success of it but I believe they will and as the only manufacturer doing this, they have certainly stolen a march on the other firms.”

But despite the success of the deal, Marr is still not happy. He is holding out for a change in the FSA better than best rules which he says is far too restrictive. He hopes it will happen next year, when the CP121 results are announced.

Marr says: “The way it is at the moment, the rules make it virtually impossible to do business. The only point of any regulation is to benefit the clients but it&#39s a nonsense and does not deliver.

“I have always thought the 1986 FSA Act was an artificial restriction but most IFAs want it to stay. Clients lose out on the best products because IFAs find it too difficult to prove that they are better than all the others available.”

A&B is located within 15 minutes of the City&#39s biggest law firms and specialises in advising legal clients who are used to paying fees rather than commission.

At the top end, clients pay fees of £220 an hour. While SSASs and Sipps are a speciality, PMI is still contracted out.

All employees at A&B are actively encouraged to clockwatch and log the amount of time they spend on each client, who is char-ged per 15 minutes. Administrators and research staff all record the time spent on each client.

He denies that this is a conveyer belt approach and says: “Our prime product has always been adv ice operating on a time/cost basis.”

Marr adds: “We are now advising clients on far more sophisticated products like EISs and VCTs. Our typical client will be someone with a solicitor – someone who needs advice on a will, shares in estates and in businesses.”

Marr believes that, at the moment, the IFA sector is predominantly still a group of small shopkeepers that operate on a highstreet basis like a butchers or bakers. He says for years people have been popping in occasionally and paying advisers on a commission basis but believes this is not the fut-ure of financial advice.

He denies A&B is making a divide in the industry greater and says: “I think the division was already there. Client differentiation is what attracted Aegon to us.”

He thinks in the future the ordinary man in the street will be encouraged to stay with the multi-tied provider because small advisers are moving tow-ards the big networks, selling products rather than advice, and high net worth clients will be with firms such A&B. Marr came to A&B three years ago when he merged his own business with the company.

The man who has Rol-and Rat as one of his former clients brought many of the media-related clients the firm still has now on its books, including some 1960s rock stars although he would not be drawn on naming names.

Apart from the big individual clients A&B now ranks headhunters White-head Man among its list of corporate clients.

He quite regularly finds landed gentry in the waiting room sat along side pop music lawyers and claims he was able to spot around 20 of his clients in the Sunday newspapers&#39 rich lists this year. Marr cites the success of chief executive Christopher Rodrigues in moving Bradford & Bingley towards an intermediary role as a similar gamble to Aegon&#39s plans to buy up ten more IFAs and move into UK distribution.

He thinks the “time has come” for A&B and Aegon but it certainly remains to be seen whether the deal will see Aegon and its IFAs challenge B&B as one of the UK&#39s biggest distributors.


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