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Influence the outcome

The FSA&#39s proposals to end polarisation are in a consultation paper

and we all have a chance to influence the FSA&#39s thinking.

Misys is taking this consultation period very seriously and we are

undertaking research among our five networks across a broad section

of 7,500 IFAs.

Nothing in the consultation paper undermines the existing IFA

business models. The issue becomes one of description and the two

main options for most IFAs are:

Drop the independent label and continue to get commission as they are

now and become an adviser via a multi-tie or whole market distributor


Feedback from the many members we have spoken to at our January

roadshows since the consultation paper was issued suggests this is

the most probable option for the majority of members.

The split between those taking the multi-tie route and those taking

the whole-market route will probably depend on commercial commission

rates, simplicity of product selection, service standards, client

profiles and future feel on market demands.

Move to a fee-based structure and retain their “independent” status.

I think that the majority of IFAs would like to retain the term

independent within their title.

However, if this means forcing customers to pay fees and cripple an

IFA&#39s business model, then only a handful of members may be in a

position to consider this commercially by the end of the year.

What price the title independent when an adviser that can advise from

the whole market and take remuneration from commission and fees, who

provides quality advice in a compliance sales process is as


Indeed, that “authorised financial adviser” can be seen to offer more

choice to their clients. Basically, an IFA who does not believe they

can remain in business through charging fees because they think

consumers are not ready for this has to take the “non-independent”


The FSA classifies this as a multi-tie route. Having decided to forgo

the independent title, advisers can either work for a product

provider or a distributor firm, usually within a network environment.

Consultation paper 121 is correct in that an IFA linking to a host

provider will involve more of a change and more of a sacrifice of

that IFA&#39s autonomy. I am not convinced that people who have left a

directsales environment will want to return.

Network members say the assumption that they will tie with product

providers is simply not the case. This is not the strategy envisaged

by Misys as we see distributor firm status of more value to our

members and the Misys networks as a whole.

My hope is we can come up with a system that allows a vibrant,

profitable and successful advice sector to continue and that must be

a key objective of the whole industry over the next few months.

The changes that the FSA are bringing in will put pressure on IFAs to

maintain their level of gross income faced with clients who may not

want to pay fees.

I agree with Nick Bamford of Informed Choice who says: “Consumers are

going to be misled into thinking that a multi-tie is the same as

being independent”

They will be misled as the only difference can be that one

“independent adviser” charges a fee when they look across the whole

product market and one “adviser” charges a fee or commission when

they look across the whole product market. Confused?

For most independents, nothing changes the business model they are

working to although the FSA is forcing a name change. All the reasons

for remaining in a network (compliance support, marketing help,

training and development, research,etc) still apply.

We live in a complex world with detailed layers of tax regulation and

the pace and change today lead to ever more complex lives.

Our sector develops products to fit those needs and the key principle

of an adviser is still to understand a client&#39s needs and ensure the

product sold is suitable for that client. This should not be

constrained by having to charge fees.


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