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Davy says small IFAs to be post-polar winners

Small IFAs are set to be the long-term winners in a depolarised world, succeeding where national firms and networks fail, according to former DBS chairman Ken Davy.

Local IFA firms will be able to capitalise on the relationships they have built up with clients and offer tailored services to fit their needs, Davy told the Distribution Strategies Post-Sandler conference in London last week.

He said because of the sheer size and diversity of their clients, nationals and networks will struggle to fit into either the multi-tied or IFA camps. He said some of their clients would have no problems paying fees while others would be unwilling to do so.

Along with small IFAs, Davy pointed to banks and product providers as the winners as a result of changes to distribution.

He told the delegates he thought the best case scenario would be a 20 per cent reduction in the IFA sector but that could rise as high as 50 per cent depending on the outcome of CP121.

Davy said: “National firms will see a number of challenges in this new world. They will have advisers and clients who will not fit neatly into any of the proposed categories. Networks will face the same difficulties that national IFAs do.

“Banks, product providers and IFAs will be the long-term winners. Banks and product providers will do well but not at the expense of the small IFA. There may not be as many IFAs in the new world but those that remain will still provide a valuable service to their clients.”

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