Five years on from the RDR, and the independent vs restricted debate still holds an exalted position in the market.
Significant swathes remain fiercely evangelical in their belief that independence is a pipe dream, or that restricted is a recipe for disgraceful shoehorning.
Many of these people are unmoved by the dearth of conclusive evidence when it comes to client outcomes. Initial charges for restricted advice are marginally higher than independent but, at the same time, restricted advice was shown to be marginally more suitable than independent in a recent FCA review.
Yet the likes of Bellpenny (now Ascot Lloyd) and, last week, Sandringham, have still found sufficient cause to ditch the restricted moniker to go whole of market. For businesses with hundreds of advisers, that is no minor task, and represents a significant statement to the wider market that, while many sought solace in the looser regime of restricted post-RDR, the case for the prosecution is growing in strength.
When you drill down into it, the reason firms like Bellpenny and Sandringham have dropped the restricted label for independence has precious little to do with getting a better response from clients. It is because, with competition from all sides, from nationals, networks, consolidators, local firms and major providers alike, ‘restricted’ rarely sounds like the most appealing offer for a prospective adviser recruit.
Sandringham chief executive Tim Sargisson admits as much in our cover story this week. “Well, they are restricted” has become a useful battering ram for advisers looking for an excuse to beat up models they may not have liked anyway, like vertically integrated advice propositions run by product manufacturers. Forensic analysis might show the difference in underlying investment breadth to be minimal to non-existent.
There are still a huge number of small independent firms, who may pay for a support service provider, but are absolutely up for grabs when it comes to joining a network or national. Our healthy advice market still boasts more than 2,000 one-man bands, and another 6,000 planners in firms of between two and five advisers.
Data suggests a roughly 40:60 split between directly authorised advisers and appointed representatives, so networks and nationals have the potential to pick up not just hundreds but thousands of extra members. Trouble is, plenty just can’t see themselves dropping their proud heritage of independence overnight.
I do have some sympathy for the likes of Sargisson. Plenty of today’s restricted models are a world removed from their single-tied ancestors. But the fact remains that others are not. Advisers still have a job to dig beneath the skin of the proposition of any firm they are considering joining, regardless of independent or restricted status.
Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1