It is obvious that this is a marketing ploy to help recruit more advisers to Simply Biz. The reality of the situation is their desire to get more people to move from networks to themselves.To suggest, even if they do not decide to leave their network, it would be a good move to have a shadow company, because of today’s litigious society, is bad advice and contrary to the need to have openness and clarity in respect of dealings with clients. This advice is seemingly only designed to strengthen their recruitment arguments. The reality of the situation is that an IFA will not gain any protection by having a shadow company for he, or she, will still be accountable for their actions, whether or not they try to hide behind limited liability. It is old hat that IFAs in networks are imprisoned in some mediaeval fortress from which there is no escape and in which the network barons are seek- ing to fleece the poor incumbents incarcerated in their dungeons. This network has a rather more enlightened outlook than is so ascribed to networks, generally in that members have several options open to them at any time during their membership. They can remain as they are, benefiting from their independence yet availing themselves of a fully accountable compliance service for which the network is responsible to the FSA, unlike Simply Biz and other service providers who are accountable to no one and can simply back off should the IFA be disciplined. IFAs need to know that such service providers do not have FSA authorisation and are not accountable to that body. Also they can opt for direct authorisation and we, the network, continue to supply a full compliance and T&C service. The com- fort for the IFA is that we are an authorised firm and fully accountable to the FSA, whether or not we are supplying an arms-length service or a network service. Furthermore, our members have a third option which enables them to become part of our national IFA, whereby they can have the benefit of a full administrative and IT support service. This flexibility of choice indicates that any IFA can make changes to his status depending on how he sees developments in the industry and also accord- ing to his specialised needs, be they personal or commercial. This is good news for IFAs and is perhaps why many of out new members have abandoned direct authorisation for the com-fort of a network that exists to provide the service required to enable the IFA to maximise his time with clients. One further benefit we offer to network members is a practice buy-out arrange-ment. It is very difficult for small IFA firms to build a business that has capital value, especially if they are reliant on indemnity commissions and have little trail income. If such firms are directly authorised what happens to them when retirement beckons or illness forces them to close their business? We take care of both eventualities by providing continuity of their agencies and, hence, renewal commissions as well as finding a member who will gladly take on their client bank in return for either a capital sum or income. My advice to IFAs is to look to the long-term implications of their decisions and to be aware of those who are peddling solutions which may conflict with openness and clarity for the client. W Stanley LovellGroup executive chairman, In Partnership
Having a suitable spread of assets is a prerequisite to good portfolio construction.
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