Independence is much in the news of late. Until a short while ago the regulator appeared keen, if not to actually eradicate independence, to prevent any firm from so describing itself. Thankfully, common sense eventually supervened. The latest threat seems to be the hoovering up of independents by the likes of Standard Life in the race to be the next St James’s Place.
In this first of a short series of articles, I shall try to give you my estimate, based on my own experiences of the last 36 years, as to how we have arrived at where we are today. I shall try also to give you my best estimate on where this particular industry trend is going.
When I interviewed at Hill Samuel Life Assurance in January 1980 aged 16 for what became my first job as a quotations clerk (rate books and a calculator – no computers) it was explained to me that IFAs – brokers as they were then known – were king. The only way Hill Samuel would be able to stay in business and keep us all employed was to keep them happy. Therefore, I had to do quotes quickly and accurately. Ideally, I should also throw in plenty of bowing and scraping. Failing that they would use a competitor.
Being “independent”, I was told, there was nothing to force them to use Hill Samuel. That seemed logical enough so I naively asked “in that case, why doesn’t Hill Samuel just employ people to sell its products direct to the general public?” This provoked much spluttering by the chief clerk doing the interview. He patronisingly explained that such people were known as direct salesmen and that nobody trusted them because, unlike brokers, they were not independent. Everyone regarded them as a lower form of life, he said. Everyone, apparently, apart from Hill Samuel’s senior management.
I shortly discovered they were building up just such a direct salesforce entitled Hill Samuel Unit Life Services, or HSULS, generally and snobbishly referred to in the broker division by the unflattering anagram “Slush”. The salesmen themselves were treated pretty meanly by the broker division. In the Leeds office it was felt insult was being added to injury by HSULS being allowed the use of a desk and phone.
Personally, I have always believed in being nice to people on the way up and had enough sense to practice that philosophy even at age 16. I made their lives easier when and where I could, mainly by doing their quotes fairly in turn. Doing so meant risking the wrath of the chief clerk. He preferred to keep bouncing them back to the end of the queue behind any broker quotes that came in. It paid off. Fifteen years later when one of the most derided HSULS salesmen who had made a success of himself gave me a job.
It paid off for Hill Samuel also. Within a very short time the direct sales force became HSLA’s main income earner, far outstripping the broker division for all its airs and graces. One of those direct salesmen, if I recall correctly, was my old friend Harry Katz. I had had my first experience of the ambivalence (I will be kind and not call it hypocrisy) that then and now surrounds the concept of independence. It would not be my last.
Neil Liversidge is managing director of West Riding Personal Financial Solutions