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Forecasts of exodus are exaggerated

The first meeting of Money Marketing’s panel of business transformation experts said the much heralded exodus of advisers from the industry has been exaggerated and while there may be a short-term blip, early predictions of up to 50 per cent moving out are wide of the mark.

But the panel – whose debate is featured in this month’s Adviser Evolution published next week – said options are increasingly limited for companies that are not willing or able to make the transition. Buyouts are increasingly done on an annuitised basis rather than by a lump sum and non-transitioned businesses are likely to struggle to sell.

The panel also said more clarity is needed from the FSA over the role of introducers if this is to be a viable option for older advisers.

The discussion also raised concerns that much of the business risk lies with business owners rather than advisers. Succession Advisory Services chief executive Simon Chamberlain warned of the possibility of “toxic” RIs, who may refuse to help businesses move towards RDR compliance and then leave and join a compliant firm. Chamberlain said business owners need to act to rid their businesses of these RIs as soon as possible.

The discussion highlighted the “cost demolition” of adviser businesses. This is the time and energy expended in searching the market for the right fund when the client simply wants a 5 per cent return, and is part of the limitations of whole of market advice.

A number of the panel believed the debate between restricted and independent advice is a red herring and will ultimately become obsolete, with many advisers choosing to class themselves as independent specialists rather than whole of market independent advisers.

The panel highlighted handling legacy assets as one of the biggest problems facing many adviser businesses through the transition process.

Veracity Asset Transformation Service chief executive John Baxter described the impact of legacy assets as “suffocating”, with many of them “high-charging, poorly performing, with little or no recognition of risk”.

There was also a debate over the increasingly popular concept of life planning. Some members felt as the concept of life planning is built on an honest and open relationship between adviser and client, clients may be reluctant to build a similar relationship with a new adviser if the first adviser leaves the firm. But Kinder Institute of Life Planning founder George Kinder suggested life planning can be sufficiently embedded in corporate processes to ensure it works at company level as well as individual level.

Read the full debate in this month’s Adviser Evolution or online at


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