Helm Godfrey managing director Bruce Wilson is predicting a power shift from providers to IFAs ahead of the retail distribution review as the national IFA goes on the acquisition trail with a £2m war chest.
He says a shift away from product sales towards holistic advice means that IFAs will no longer be “tied to providers’ apron strings”.
He says: “2012 is a complete dawning of a new age. It is easy to say this is going to be revolutionary but I believe it will be. Historically, IFAs have been product pushers. They have been the instrument of product providers and insurance companies and they find it very difficult to break with this idea and think ’I am selling advice, not products’.”
Wilson says as the emphasis on advice over individual products gets stronger, the dynamic between providers and advisers will change.
He says: “The balance of power is changing in favour of the distributors and by that I mean IFAs. The product providers used to have all the power, we were the agents and we were tied to their apron strings. Now we are not going to be. We are the access to clients. Products are going to be sold at retail prices and providers are desperate to sell them to us.”
But Wilson has concerns that although IFAs’ profile will be raised, the overall supply of advice is likely to reduce.
He says: “The reason that supply is diminishing is because the regulator is putting the standards up, which means less people will be able to meet them. The FSA is also saying we cannot have any hidden remuneration, so that reduces remuneration and the number of advisers. We are losing numbers dramatically and a lot of firms are not going to be profitable, so they are going to leave too.
“It means that, as an adviser, you have to look after only more wealthy, affluent people and it is going to be a challenge because all the other people are going to have to go for secondtier advice. You cannot overcome the challenge. You either raise the bar, which is what the FSA needs to do, but that means there are going to be fewer people by definition.”
Helm Godfrey has increased its cash reserves from £50,000 10 years ago to £2m. Wilson believes now is the time to tap these funds and look at potential acquisitions.
The national IFA has already tried to buy two undisclosed businesses this year but it was outbid on both deals.
Helm Godfrey is holding discussions with another firm over a possible deal.
Wilson says: “We have a war chest and we think we are app-roaching the time when there is going to be a lot more blood on the floor unfortunately, with IFAs searching or running for a safe home. I believe Helm is as safe a home as you could find.
“What we want is advisers who have a good relationship with their clients who are doing well but realise they need more structure and format and need to be part of something bigger and better. I believe we can provide that.”