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Small IFAs urged to form co-ops to compete

Smaller IFAs should form co-operatives to improve their bargaining power in the scramble for distribution, says Falcon Group development director Jeff Williams.

At the Money Marketing IFA UK conference in London last week, Williams warned that product providers were only interested in making deals with the top 100 IFAs and smaller firms should form strategic alliances to compete.

Williams called on IFAs to develop a new business model that would see consolidation of bargaining power giving firms a bigger clout without having to go through a merger.

He said a co-operative or affinity group model could allow smaller IFAs to punch more than their weight in deals for technology, training, marketing as well as in negotiations with providers over product distribution.

Williams said: “IFAs in smaller firms are asking themselves how they are going to be able to access the value in their businesses. Providers are not interested in one-man bands.

“But if you are a small business, there are other like-minded people in your area who like you will want to achieve critical mass for negotiations.

“By grouping into co-operatives of 10 IFA firms together you will get a lot more interest from providers than dealing alone.”

Tony Catt IFA sole practitioner Tony Catt says: “As a sole trader, this sort of approach is at the forefront of my mind. There is a concern that if CP121 is adopted, consolidation of some sort will be necessary to protect ourselves.”

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