View more on these topics

Co-operate to save the industry

I have recently started to question our future in relation to the increasing costs and the ability to obtain cover.

If Inter-Alliance, RJ Temple, Millfield and Lamensdorf have closed or are losing money because of the downturn in the market and increasing procurement costs, what hope does that leave for the small and medium-size IFAs?

The recent announcement of a reduction of 1,800 in the number of RIs by the Sesame network suggests that some qualified experienced IFAs are being lost forever to the industry. Numbers will continue to decrease, as some will be unable to obtain PI cover. With the average excess on PI standing at £9,400, a successful claim may put individuals out of business.

The disbandment of most direct salesforces by insurers, means there are no breeding grounds for future IFAs.

It is unlikely that IFA degree courses will produce sufficient new blood to replace the losses, especially since a large sector of the industry offer self-employed contracts (that is, networks) and other smaller companies cannot gamble on the financial risk of salary-related packages.

Reductions in commission levels with the Sandler proposed products and the European proposals resulting in dramatic increases in the costs of PI against a picture of diminishing income does not fill me with confidence.

The FSA is talking about a back to basics approach and allowing more freedom on the definition of complaint cover. They may also allow single cover for groups of IFA who are unconnected. If they move at the same speed as they have previously, this will come too late in the day as the current pressures have driven out even more advisers out.

A sensible approach to PI and commission is crucial to all of our futures.

I believe that IFAs should consider banding together, not in a form of network, but as a collective or co-operative of businesses to work for the good of our clients, each other and our business.

The benefits could be the saviour that some individuals or small companies are crying out for, the difference between profit and loss. These benefits could extend to other areas such as compliance, PI cover, marketing, IT and admin.

John Newton

Principal

Chartwell Associates (IFA),

Egham, Surrey

Recommended

Equity-release business booms

Equity-release lending shot up by 121 per cent in the first half of this year compared with 2002. The figures from the Council of Mortgage Lenders, based on returns from 21 lenders active in the equity release market, show that £498m was borrowed by older homeowners in equity-release mortgages – more than double the total […]

Future is bleak unless common sense prevails

“I am a well-qualified, well-paid manager and a member of a good pension scheme. I am ambitious and want to make my mark, and am prepared to work hard to achieve this. “I often work late and my spouse complains that I don&#39t see enough of the children. I don&#39t get any credit for just […]

&#39Risky&#39 reverend

Allow me to set the scene. A retired vicar and his wife, both aged 85, move into a Church of England nursing home on full nursing care. They have an existing Standard Life investment bond. They need to make a further share exchange investment in agreement with their accountant who has enduring power of attorney. […]

Summer fund sales stay hot with buoyant July

Investment fund sales rose by more than 50 per cent in July compared with the same month last year. Investment Management Association figures show that net retail sales hit £863m last month, slightly down from £870m in June which had seen a big rise but significantly up on the £567m reached in July 2002. Net […]

Neptune India: three stocks we’re buying & the one we’re not

By Kunal Desai, Head of Indian Equities The Neptune India Fund’s investment process serves as a key differentiating feature of the portfolio versus its peers, contributing to its significant outperformance under Manager Kunal Desai’s tenure. Focusing on industry disruption, accounting quality, liquidity and corporate governance, Kunal sets out three stocks that he’s buying in the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com