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Retaining independent status post-RDR will not be as onerous for large firms or networks as some in the industry believe, but will be an 'insurmountable challenge' for sole traders, acccording to the managing director of the Sense network.
Tim Newman said the release of several recent papers, including the FSA's guide - 'RDR: Is your firm on track?' - had convinced him that Sense, other networks and large IFA firms will be able to retain their independent status if they offer panels of experts, third-party research and shared advice.
Sole traders, on the other hand, do not have the infrastructure to remain independent, he argued.
Newman suggested individual advisers within Sense would not need to be competent on all retail investment products.
"If my colleague assists with the pension element of my client's recommendation and I assist him with investment - and the client as a whole gets independent advice which is fair, comprehensive and unbiased - then we meet the independence criteria.
"As long as there is a team approach to offering advice we will remain independent," he said.
However, sole advisers or smaller directly authorised firms looking to retain independent status face an 'insurmountable challenge', according to Newman.
"There's no team to share the competency burden with, and they'll need to find the time and inclination to operate a credible investment committee structure - I just can't see it happening." he added.
He also said Sense would "champion" independence and "definitely not" take the multi-tied route, although he expected other networks might do so because it would deliver higher remuneration.
"These networks might find themselves in trouble with their advisers who have worked independently in the past," he added.
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| Comment | Sense: Independence an 'insurmountable challenge' for sole traders |
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independence insurmountable challenge
I DISAGREE WITH ALL THE NEGATIVE COMMENTS A INCREASING NUMBER OF CLIENTS ARE SEEKING OUT THE SMALL IFA FOR TRUSTED ONE TO ONE ADVISE AND IT IS NOT A INSUMOUNTABLE CHALLENGE FOR THE SMALL DIRECTLY AUTHOSISED FIRM IF YOU SELECT A EXCELLENT SERVICE PROVIDER LIKE SIMPLY BIZ
Posted by: Kevin Fletcher
certainly a challenge
If a firm is to retain independence, isnt one of the objective to be able to coherently select investments from the whole retail investment universe and therefore must be able to demiontsrate that they a) have the ability to do this and b) have actually achieved this? If this is the case and Im sure it is, this issue of independence is more widely applicable than simply sole traders. In my experience, many IFA's who view RDR as simply passing exams and segregating client banks are missing this major issue like an elephant in the room.
Posted by: Andrew Alexander
Independence an insurmountable challenge
I just Mr Newman make sure his own house is in order before predicting the demise of small directly regulated businesses. We have heard all this self-righteous back slapping before from other networks which were going to conquer the world and sweep away everything in their path. Unfortunately, many now lie on the scrapheap and their names are just a distant memory.
Posted by: Bob Grapes
And just what else would you expect the head of a Network to say?
Go it alone folks????
Posted by: Carrie Oakey
Take a chill pill!
I think some people need to take a 'chill pill' before posting comments: 1) CAPITAL LETTERS IS CONSIDERED TO BE SHOUTING! 2) If you take the FSA's comments on demonstrating independence to the nth degree, you would not only have to consider all investment choices available from UK providers but you would also have to consider those choices that are available in the UK from non-UK providers whether regulated or not. In addition, you would also have to consider commodities, property, etc. Don't know about you Sunshine but I think you have to draw the line somewhere! 3) 'Back-slapping' and 'taking over the world'? Sounds like s meeting of some of the World's bankers and politicians...someone get the cream and cling-film, sounds like we're in for a night of fun! ;-) Seriously though, if Mr Newman believes in the 'writing is on the wall' then he is free to state that. There is no attmpt as far as I can see to oblige anyone to take his word for it. Finally, 'Calm down dear'! It's only an opinion!
Posted by: Baron Bolligrew
With Confusion
The industry is 10 months away from RDR and here we have an interesting range of opinions on its consequences. I not sure that that fact does not say more about the insanity of RDR than all the shouting about it. That the FSA need to produce an 8 Page aide at this stage goes some way to demonstrate their own uncertainty about how the market is completing the uptake of a restructuring of the industry. I think the answer is - with considerable confusion.
Posted by: Glen McKeown
English
The standard of English in IFA posts is atrocious. The education system in this country has collapsed...
Posted by: Ken Durkin
NonSense
Did Sense pay for this advert?
Posted by: lol
@Ken Durkin
Considering the average age of an IFA its probably more early onset dementia kicking in rather than the current education system
Posted by: Kevin Smith
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Independence - unsurmountable for sole traders
I fully agree but for different reasons. Firstly the huge burden of cost of regulation imposed upon our practice in moeneytary terms - to pay for reckless regulation and regulators who have failed the general public repeatedly. Then there is the imposition of beurocracy and red tape - and a Gabrial system which does NOT work. The time I have spent with FSA on paperwork - and the FSA failings means I cannot work on my clients. The FSA has requires me to " read their hand book ", quite frankly if they require such an onerous Tomb, for which there is no requirement to adher to eg Banks who breach the Rules pay a fine with a hefty discount - and carry on regardless. Goodbye to all small firms - for the benefit of large banks and large groups - and the restrictions of advice for ONLY the FEW.
Posted by: Ian Lees