As an IFA, you likely chose this route because you truly care about the value you deliver to your clients. Your commitment to earning the title of “IFA” means you’re equipped with the knowledge and ability to recommend any suite of solutions that is appropriate for your clients’ needs and goals.
But, as you will know from experience, the advice space is constantly evolving. From the days of RDI to the more recent introduction of Consumer Duty, advisers are constantly adapting to new challenges and being presented with fresh opportunities.
One challenge you might not have seen coming, though, is vertical integration.
The rise of consolidation – accompanied by, or perhaps propagated by, rising costs and increasing administrative burdens for small firms – is leading to what we believe is a serious affront to the word “independence” and what it stands for.
Let’s talk about vertical integration, the meaning of independence, and what you can do to preserve your future as an IFA.
Vertical integration, DFMs, and consolidator red tape all make it harder for advisers to tailor solutions
For those not familiar, “vertical integration” describes the process of integrating advisers and their clients into a rigid end-to-end advice process. This typically happens in larger firms and networks who employ or consult discretionary fund managers (DFMs) and/or have designed an in-house investment proposition that advisers must stick to.
In essence, if you are bought out by one of these firms or networks, you may be required to move client assets into a pre-set portfolio setup as part of your contractual obligation. What’s more, you may be tied into the marketing requirements, compliance processes, due diligence, and even client communication preferences of the company you belong to.
Yet, you’ll likely still be marketed as an independent financial adviser or planner.
Here are five issues with this process.
- Your career progression is stifled. How can you learn, adapt, and innovate client solutions when everyone is dancing to the beat of the same drum?
- You can’t recommend what you think is best. Yes, your due diligence, compliance, and paraplanning costs will go down, but at the expense of a truly bespoke service.
- Your clients aren’t getting what they pay for. When professionals and retirees seek independent advice, they expect to receive it. Many don’t know the difference, but the point remains: if you offer independent advice, you should be able to deliver it.
- You’re locked into a process you can’t control. One of the huge benefits of independence is having the ability to control and justify the way you handle your clients’ assets. Without this control, you could run into problems down the line.
- You may erode client trust. Moving your clients’ investments is a big deal, and not everyone will welcome the change, especially those who are in retirement and already liquidating their shares on a gradual basis.
Nevertheless, we understand that we need to address the elephant in the room. With the cost of operating your business going up – rising employer National Insurance, among countless other costs, could mean your bills have gone up thousands this year – and regulatory red tape becoming more restrictive, you could be running out of options to keep your firm on its feet.
So, while you may well be concerned about the existing threat to independent advice, your ideals may not be able to stand up to the practicalities of your situation.
Is there a better way forward? We think so…
You may feel as if you’re standing at a crossroads: put your business in danger of being eroded by costs or move to a consolidator and compromise your independence.
Fortunately, neither must be the case. At Corbel Partners, we’ve worked out a better way to do business – one that keeps client solutions truly independent while offering small firms the infrastructure to stay afloat.
Our offering comprises:
- High-quality in-house tech built with our advisers in mind
- Ongoing support with CPD, including exam training courses and ad-hoc workshops
- A full suite of compliance, paraplanning, and administrative help – and you only pay for what you use
- Marketing infrastructure from sector-leading experts, The Yardstick Agency
- No DFMs or in-house restrictions; you’re free to tailor your advice to your clients, which is the way we believe it should be.
As Tracey Plant puts it: “The best thing about working with Corbel Partners is it allows me the autonomy to run Seraphim Financial Planning the way that I would like to, but it also removes all the risks that come with being a one-man-band.
“I would recommend Corbel Partners to other financial advisers. Essentially, they allowed me to stick to my core values and I do believe they’d allow any other adviser to stick to their core values too. To me, that was being truly independent and able to run my business in a holistic manner.”
Read more: The benefits of joining us
Get in touch to learn more about joining Corbel Partners
If you wish to preserve your independence without the risks of running your business solo, we’re currently open to applications from advisers.
To learn about becoming an appointed representative of Corbel Partners, or if you’re interested in joining our team of IFAs at Arcus Wealth, email hello@corbelpartners.co.uk or call 01925 637891.
Please note
This article is for general information only and does not constitute advice.
All information is correct at the time of writing and is subject to change in the future.