It is about three years since the earliest investments were made in IFAs by product providers. In every case, the level of profits has been minimal or non-existent as the overall level of commission has fallen to levels where it is not economic to operate on anything other than a fee basis in the SME market.Those advisers who continue to flip schemes company to company will simply accelerate the demise of group scheme initial commission. When product providers invest in IFAs, it is simply a case of trying to treat the product-flogger as an endangered species. It is the classic case of “how not to secure market share” – that is, don’t try to buy it. The market is moving forward and yet many of the traditional providers and the out-of-date club the Association of British Insurers are still living in the last century. The coming of A-Day will have a major impact as the public look to self-invested personal pensions as the default choice – the ABI’s lobbying on protected rights was disingenuous at best. As I understand it, its premise was safety, that is, it is safer in a personal pension plan where it is in with-profits – before I forget maybe this could be retitled as perhaps profits – or in “non-emerging markets” as opposed to it being in cash in a self-invested personal pension. More to the point, who among the providers would recognise a good business from a shell, so how are they making these decisions? Stockmarket-listed companies will answer to their shareholders but, in the case of mutuals, no such secondary due diligence exists. We need to ensure that, as IFAs, we pick our allies carefully and avoid simply going with the flow. Working with badly run companies or those with poor admin processes with lots of correspondence where one letter would have done – is not for the faint-hearted. I recently asked my team for a “blacklist” of providers which were dilatory more often or not. In the end, we listed the good guys and getting to more than one was no easy task. Providers often ask us what our strategy is for the future but just how much do we know about theirs? I know many people object to bankassurers but we need stable providers which are not buying distribution or scrapping about whose pension ideas are better. As the phoenix companies seem to be hitting a second round of trouble, perhaps we need the FSA to take a stronger line and insist on people facing up to their responsibilities. When a company is acquired, the buyer will rarely take the past selling liabilities but that does not mean they disappear and nor should they. The seller should have to retain the company and effect run-off cover. Any other approach generally seems to find the rest of us funding the liabilities. The problems that my friend had from within was the conflict between investing for growth and the venture firm looking for a return on capital. Given the need for all IFAs to move to a new model, venture capital needs to be given a wide berth. Having said that, the record of VC investments in IFAs to date will probably keep them well out of sight. I accept some providers may be in for the long haul, I also accept that many small IFAs are not operating as businessmen but then, given recent news, neither are some of the big ones.