The recent move by Standard Life into the advice market with its purchase of Pearson Jones is the latest by providers to attempt to secure wider distribution.
Anyone that has been in the industry for long enough will have seen it all before: from the life office purchases of estate agents in the 1980s to the buying of IFA networks and now actual advice firms. There are some that argue Standard Life’s move is a threat to IFAs but when I think about the likely outcomes I doubt many of us fear losing our clients to them.
Most IFA firms are relatively small with strong client relationships and our main competition is more likely to be apathy rather than other advisers. And when it comes to competing directly with restricted firms I expect many IFAs could quite happily in terms of advice or service proposition.
Of course as things stand today Pearson Jones’ website makes a big play on it being “entirely independent”.A takeover by Standard Life, however, would lead me mighty surprised if things stayed that way.
Pearson Jones’ own client communication explains the situation as follows: “Initially nothing will change for clients; you will continue to receive the same high level of service”. It then goes on to say “advisers will still have a wide range of investment products at their disposal, accessed through Standard Life’s award-winning wrap platform”.
As a fiercely proud independent financial adviser my first thought is that a “wide range” is another way of saying a “limited range”. Also, if the Standard Life wrap was really the best solution for each and every of Pearson Jones’ clients (which I doubt), then why were they not all on it already? Can the company guarantee it will remain the best option in the future? The disadvantages of restricted advice start here.
So rather than being a threat I suspect the Standard Life takeover will be a benefit to local IFAs.
Some clients will notice the move from independent to restricted and, like me, question why. Some of those will move their affairs to a new adviser as a result.
In addition, given how passionate Pearson Jones has previously been about promoting its independence, no doubt some of its advisers will feel uncomfortable, and perhaps some will prefer to move elsewhere to retain that status. It is inevitable disruption of that sort will prompt some clients to “shop around”. At our practice we have seen a similar result from the RDR changes and gained several good clients as a result.
While Pearson Jones is only one firm, it may be the first of many. As providers move more and more into the advice market via takeovers, I suspect we will see a similar effect on a larger scale which will benefit the remaining truly independent advisers.
Scott Gallacher is director of Rowley Turton