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Independent view

There is an old Chinese saying: “Let us live in interesting times”. Well,

life as an IFA these days is certainly interesting.

What with the pension review, the FSAVC review and endowments debate, life

as an IFA just seems to keep on getting more and more challenging. Many of

the traditional products that used to be sold can no longer be justified

and there is increasing pressure to reduce commission.

Unless you have a big IFA practice, it is practically impossible to be a

general practitioner and offer the full range and give truly good financial

advice. The key is to specialise.

Concentrate on your core area and refer other work to specialists,

including other IFAs. Does it sound crazy referring work to other IFAs?

Well, it need not be. Let me explain why.

A number of years ago, I met an adviser who was really much more of a

facilitator than anything else. He was not registered under the Financial

Services Act as an IFA, nor was he an accountant or solicitor. Yet he had a

number of very weal-thy expatriate clients and worked on a fees-only basis

putting together good advice for them by working his network of advisers.

His fees were quite high because he was seen to be a specialist.

Ever since then I have inc-reasingly run our businesses along these lines.

Our core businesses are in accountancy and financial services. Our

specialism is lump-sum taxefficient investments (including pensions) for

high-net-worth individuals who are typically age 55-plus and preferably the

owners of growing businesses in a specialist or niche field themselves.

While we are authorised to arrange mortgages, life and health insurances,

we increasingly refer these enquiries to mortgage brokers, general

insurance brokers and other IFAs. Our aim is to do nothing but lump-sum

investments and pensions after the next 18 months by gradually stopping

other classes of business.

Our investment business is usually conducted with a panel of stockbrokers

or multi-fund managers. Pension business includes drawdown, phased

retirement, pension transfers, executive pensions, SSASs and selected group

stakeholder or group personal pension schemes (basically, large schemes


A specialism we particularly like is pensions and divorce. We are members

of the Div-orce Corporation and provide actuarially produced reports on

pensions on divorce for solicitors&#39 clients. This is a good way of opening

doors to matrimonial lawyers. We are inc-reasingly finding that solicitors

are approaching us as the local experts. Now that is an interesting twist.

So far, we have found that all the cases referred to us by solicitors

involve big estates, typically £500,000 upwards. Two main types of

business result – investments and pension transfers.

We firmly believe in lumpsum investment business for the following reasons:

Investment business rem-oves commission clawbacks.

It generates fund-based renewal commission each year (an appreciating

asset of your business).

We enjoy the working relationship we have with more mature investors.

Investment business is usually much less hurried than, for example,

mortgages or insurances, which normally have tighter deadlines.

You are paid for servicing the client by the renewal commission.

You are guaranteed to be paid for your work once the client has agreed to

proceed, unlike mortgages and insurances, which depend on the mortgage

completing and the insurance being accepted and going on risk.

It is generally less timeconsuming to conduct the business.

It is probably the easiest area to justify fees.

It is the least likely area to be threatened by misselling reviews.

Prospects are highly promising as more and more people are coming into

money these days.

This last point is highly relevant. There is a wall of money waiting to be

invested over the next 10 years and beyond due to the baby boomers after

the Second World War. These people are now 55-plus – the classic time when

they start to come into money from inheritances, redundancies, pension lump

sums, endowment maturities, etc.

Tony Byrne is business development director for Byrne Williams Independent

Financial Advisers & Investment Specialists


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