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What&#39s wrong with independent financial advice? Nothing with the

principle, of course, but we never seem to be far away from the next whine

about persecution or the rising costs of being in business. Should we

really be surprised? After all, is the sector not suffering from some

fairly fundamental structural flaws?

An ageing demographic, coupled with a pitiful awareness of marketing and

technology means that it is not particularly well placed to operate in the

business environment of 2001. What&#39s more, the previously inept monster

known as bancassurance seems finally to be getting its act together and can

be expected to provide a somewhat stiffer challenge over the coming years

than it has over the last 10. When one considers the continuing

professionalism of companies such as Virgin, it is not easy to see where

IFAs fit in.

After all, while the standard of advice may be strong in places, the

method of delivery is almost universally weak. Even some of the most highly

regarded IFA firms fail to deliver customer-focused service. Whether this

is a direct result of a historic over-reliance on product providers to

furnish information is uncertain. What is clear is that the situation

cannot be sustained as the emerging generation of the reasonably affluent

is unwilling to be serviced on a ham-fisted basis. The emphasis must change.

It has often been suggested that the sector must stop flogging products

and instead focus on selling financial advice. All very well but what does

it mean and, more important, what does it entail?

There are far too many IFA firms in the UK that are run on a corner-shop

basis, with little or no regard for a long-term business model. It is only

by consigning the traditional business model to history and reinventing

itself as a profession that the IFA community will prosper. Alternatively,

it can shelter under the temporary cover of multi-ties before being blown

away once the big life offices realise (again) that a big network of tied

agents is a guarantee of one thing only. And I don&#39t mean profit.

There are a number of potential routes to the “other side”. Generally

speaking, when an industry is facing a radical restructure, it is

confronted with consolidation or must see off the threat of new entrants,

either from abroad or within the same jurisdiction. In the current IFA

environment, both seem to be occurring. Consolidation among the networks is

under way while the announcement that Gemany&#39s MLP is set to launch in the

UK has also created interest. The second of these is perhaps the more

interesting. Surely, given all of the hard luck stories that we hear from

IFAs, there must be limited opportunities for independent advice in the UK?

It cannot be possible to provide quality advice in a professional manner on

the shoestring levels of commission that are available? MLP obviously

believes differently and, given that it has built a successful business in

Germany with a huge market capitalisation,I know who I am backing.

So the next time I hear a whine from an IFA about too much regulation or

too little commission, I am going to suggest they reflect on how good they

have had it, because it is downhill from here unless some significant

changes are considered. There are threats all around you and you have a

more discerning target market. But opportunities abound as the wealth of

that market is growing massively. The challenge is to ensure independent

advice is the first port of call and the high-street banks and other direct

manufacturers don&#39t win.


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