My biggest concern about depolarisation, and the one about which nobody seems to be talking, is that of misrepresentation of status.
I still do not understand the basis on which the FSA can argue that blurring the line of demarcation between tied agents and IFAs will be beneficial for consumers.
It seems blatantly obvious that multi-tied agents will try to present themselves as having at their disposal a range of products as broad as any consumer is likely to need and that, as “we” all know, virtually all IFAs recommend products from their own small favoured clique of providers.
They will claim that their organisation has picked all the best providers for their particular range and that there is no point holding agencies with those whose products will never measure up.
By having linked up with just a carefully selected range of providers, they will have been able to ensure preferential standards of service and product terms (not to mention more commission). So who needs an IFA when what the multi-tied agent has to offer is as close as makes no difference to what would be on offer from an IFA?
We were approached not long ago by representatives of the Zurich IFA network. Their pitch was persuasive, though, I felt, somewhat premature. The question to which I was unable to get a straight answer was: “What if we want to use a company that is not on the Zifa roster?”
The best answer I could get was that (externally applied) market forces will force convergence to a degree that discrimination between different providers offering the same products will no longer be anything like as important as it has been in the past.
Or, put another way, that competition between providers on matters of product design will be squeezed out and therefore which provider an adviser recommends for a particular product will no longer be a significant factor in the advisory process.
So why not go with the flow and make more money with less hassle?
The whole idea of an IFA is that he is able to advise on, not merely sell, the products of all the companies which make up the marketplace.
That is what can truly be said to differentiate the independent adviser from his tied or multi-tied counterpart and one which genuine IFAs as opposed to product salesmen masquerading as IFAs should and will not give up easily – or with a clear conscience.
WDS Independent Financial Advisers, Bristol