Speirs: networks may have to 'tackle' IFAs to survive

Some large adviser networks may be forced to "tackle" their independent advisers and switch to a restricted advice proposition in order to survive, according to one chief executive.

Sanlam Private Wealth CEO Nigel Speirs told IFAonline that he thought an increase in the number of restricted networks would be one impact of the Retail Distribution Review (RDR).

"Big networks are currently operating with very small margins and huge liabilities and taking the restricted route would help resolve both problems," he said.

"Increased liabilities can come from independent advisers because they like to do what they want. [Similarly], restricted practices will see their income boosted by their relationships with providers or wealth managers."

As Speirs pointed out, several networks and support services providers, including SimplyBiz and Sesame, have already made a partial move in this direction.

He also predicted considerable consolidation as a result of the RDR, with an increase in overseas companies expanding into the UK. Sanlam - which is headquartered in South Africa -  and Bellpenny are examples of companies doing this. 

"The disruption caused by the RDR throws up huge opportunities for overseas consolidators," he said. "It is the reason Sanlam finds the region so attractive."

Similarly, Speirs was damning about the perceived benefits of independent over restricted advice.

"In my view, the commitment to independence is like a religion and often does not reflect benefits offered by the advisers - many of them only use five suppliers or so, while a restricted firm can change a panel every month.

"And the underlying funds chosen by our fund managers will be the same or similar to the underlying funds used by a fund manager chosen by an IFA. 

"In addition, when we take on IFA clients and assess them, their investments are often way up on the risk curve. So it's not necessarily in the best interests of the client to go for an IFA over a restricted adviser."