I think if Mr Ellis were an IFA he would quickly find that compliance and other regulatory burdens would reduce the time he had available to advise clients and increase his administrative burden accordingly, thereby diminishing his potential income and giving him a much longer working day.
He seems to forget that an established network provides a range of services: IT support, researched best advice, training to meet FSA requirements and to improve business practice, commission collection and administration. There is also the benefit of enhanced commission levels from providers, mortgage services (including negotiations with lenders), claims handling services, vetting of high-risk business to reduce the possibility of complaints, website support services including technical updates and industry news and a sounding board for discussing particular business issues as they may arise for any particular member.
Mr Ellis is correct in advising IFAs to carry out proper due diligence before joining a network, but it is quite difficult for the average IFA to gain the information he or she may desire.
At IN Partnership we invite all prospective members to visit our head office, where they have access to our staff and can ask whatever questions they like. We also introduce them to our current members so they can hear unbiased views about the network.
There has, unfortunately for us all, been network failures. But then there are failures in every sector of business, not least among IFA practices themselves, let alone networks.
The question of whether networks justify their existence, with the range of services they provide, is easy to answer. The very existence of well-established and well-run networks that continue to give satisfaction to the bulk of their members in a fast-changing regulatory environment is evidence enough.
There will always be disillusioned members who feel that networks are not for them and who baulk at the perceived restrictions put upon them. But most would rather have a professional network take the stress and strain of regulation and have someone with whom they can confer on issues affecting their business than be in the wilderness alone.
The questions that IFAs and mortgage advisers, who may be considering network membership, should ask are: how is the network capitalised and by whom? Under-capitalisation is often the cause of business failure, so it is important to know how strong the business is in terms of its funding to meet growth targets.
For more than 15 years networks have played a vital role in helping IFAs become established. They have been responsible for effecting the changeover from being tied or direct sales for an immense number of now very successful IFAs. It is difficult to imagine them becoming IFAs without the networks’ encouragement and support.
Stanley LovellGroup executive chairmanIN Partnership,Horsham,West Sussex