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Tom Baigrie: ‘The world has moved on’ from independent/restricted debate

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Baigrie Davies co-founder Tom Baigrie says “the world has moved on” from the independent versus restricted advice debate after completing a deal that sees it become the London office of Standard Life-owned 1825.

Baigrie will leave the business following the expected completion of the deal in Q3 and says he has no concerns about the loss of its independent status.

He says: “The world has moved on since the FCA instigated the ‘restricted’ definition. Nowadays tax wrappers and product structures are there to enable the delivery of the financial plan and have become far more commoditised and neutral in their influence on advice and selection.  

Once product features were all important and what advisers used to focus on, but financial planning is a far more evolved discipline. In financial planning the focus is on client objectives and outcomes rather than product features. 

“The areas where independence is really still of use are not in mainstream investing.  In other mainstream areas like protection and annuities and in more specialised ‘products for the few’ like EIS, VCT, structured products and Qrops there is no change in our range of choice.”

Baigrie argues negative connotations around the term “restricted” have potentially led “more product-focused” advisers to see the independent label as superior.

He says: “What defines the quality of advice is no longer its label, but the capability, resource and lack of conflict in the research team supporting it, and above all its value in achieving the clients life and financial plan.”

Co-founder Arthur Davies will remain with the business following the deal alongside managing director Ian Howe, who will lead the London operation and join the 1825 executive committee.

Baigrie will exit to concentrate on his other business, protection broker LifeSearch.

The comments come after Carl Lamb, managing director of another 1825 acquisition, Almary Green, argued “the vast majority” of firms would follow in crossing over to restricted models.

Writing for Money Marketing, Lamb said:  “Over the past year I have taken a long, hard look at Almary Green’s sustainability and concluded something needed to be done.

“It is a sad fact firms of all sizes are facing almost insurmountable challenges and neither the Government nor the regulator seem to appreciate the difficulties ahead of us.”

He added: “I have challenged many of the preconceptions of our industry in the past and believe change is both necessary and beneficial.

“I also believe the vast majority of firms will follow us down the restricted route. Indeed, I worry about the affordability – and viability – of those that do not. To continue as we were would have been putting our future in jeopardy.

“Far better to be first to cross to the other side and find it is not so dark after all.”

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Whilst some may wish to “move on” the fact is that the initial depolarisation, brainchild of David Severn, was the death of consumer understanding between agent of the client and agent of the insurer.

    This change was anti-consumer and failed to treat advisers customers fairly.

    Like most pieces of stupidity or financial vandalism it is not sufficient that we move on and forget it.

  2. Well that’s your view. I still have to come across a client that doesn’t value independence.

    As a consumer myself I wouldn’t dream of having a stockbroker that wasn’t absolutely independent. Independence is more than just products, it’s an ethos and a state of mind. Your firm has a new owner, therefore you personally are no longer independent as you have to account to a higher authority. Indeed as I understand it you won’t be staying with the new owners as you have other interests – your own firm perhaps? That would make you personally independent, even if the firm itself is restricted just to life products.

    How you can deal in life products without considering taxation, financial planning and all the wider implications that require independence is somewhat of a mystery.

    • Clearly everyone can understand the desire to deal with someone who is ‘independent’ of commercial influence. As Alan Lakey states, the definition of independent has been completely re-written by the mandarins in E14. I am restricted – but not ‘Tied’ as we understood it way back in the old days before RDR. I can use ‘anyone’ I wish in terms of fund providers and companies and my income is derived from client fees not some product provider ‘commission’. I am an agent of my client and always have been. I ‘choose’ not to advise on VCT’s , EIS’s, Structured Products. I do CPD on them, but don’t want to advise on them and (the crime of the century) I use only one Wrap, with absolutely no financial incentive from that wrap service provider for doing so, but currently, because of those decisions, I’m doomed to the title of restricted.

      It hasn’t hurt my business though and I’ve only had four or five conversations since 2013 with any initial concern over the ‘restricted’ title – and in every case I was able to explain to the clients satisfaction that they would not be disadvantaged by dropping down to my clearly lesser level. I wish the regulator hadn’t been given the ultimate power to change the meaning of the English language along with everything else, but hey-ho, thankfully this is a democracy despite the fact that we have absolutely no say at all about what they, the FCA, can force upon us. Can’t wait to hear the next set of brilliant ideas they will have to fix whatever else isn’t broken.

  3. I’m of the opinion that some people are hung up on the Kudos of Independence, when restricted advice can meet 99% of all cases. Admitted certain very clever schemes can be used, but more often than not these can come back and bite the adviser in the butt via the FOS.

  4. Harry, what I meant was that the move from a back/white structure to one where the water is so muddied that the consumer can no longer readily identify what independent or whole of market means, was a massively backward step. One that has reduced consumer trust and confidence and caused by the very body entrusted with trust and confidence.

    What a joke.

  5. Nothing to do with the business sale monies then

  6. using the words Ladder & Jack……..now form a sentence Tom!!!

  7. This is why advisers get a bad name. If you told the truth and told your clients that you sold to the highest bidder, 99% of them would say “good on you.”

    Stop talking hot air to justify it and say it like it is!

  8. This and the other much reported sale to 1825 reminds me somewhat of IDS who has now “seen the light” and had no other agenda. Good luck to those who built up businesses and have sold them at, hopefully, massive profits.

    But don’t act like martyrs.

  9. Only a totally incompetent group of people could screw up a meaning of Independent and cause so much confusion in the general public and constantly try to defend that absurd decision.
    Better to safe face and continue with the confusion in the public than admit they got it wrong and revert to a system where people knew who was who.
    Hector Sants and co, you may have moved on to other things but your legacy remains. You must be very proud of yourself. Hell will never be full until you are in it

  10. I think both Carl Lamb and Tom Baigrie wanted an exit and to pocket the cash. Nothing wrong with that per se but in both cases, they have sought to justify their actions. Independence is as independence does; one cannot serve two masters!

    The convoluted independence v restricted is artificial and should be seen and explained as such. If a business owner wants to sell up, that’s pretty predictable. I wonder where they’ll all be in 3 years and what are the terms of the deals?

  11. A regulated iFA in the Uk is not Independent. Such firms and advisers get told what they can and cannot advise on /sell every day by the FCA.The list of products they cannot recommend is bigger than those they can. A truly Independent adviser would be one that is non regulated with an arrangement with an essentially restricted Uk iFA should he need a mundane product to place.

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