IFAs eye joint ventures as nationals and networks shunned

Financial advice firms will avoid the lure of joining a national or network IFA in the build-up to 2012 and instead look to join forces with like-minded propositions, research suggests.

Despite suggestions a large chunk of the IFA community will seek the regulatory and capital shelter of larger, centralised organisations, not a single member of our  Professional Adviser panel declared it their intention in the coming years.

According to the survey, the vast majority of firms intend to expand organically while a fifth see themselves as part of a joint venture with one or more IFAs by 2013.

The results contradict the views expressed by some nationals and networks, who say recruitment remains healthy and argue it may be the FSA’s intention to reduce the number of directly-regulated firms in the UK.

Positive Solutions says it is on course to meet its 2009 target of recruiting an extra 250 advisers while 2plan Wealth Management, which launched two years ago, says it is rapidly approaching 200 advisers.

Meanwhile, IFA network Sesame is finalising an agreement to acquire Bankhall in a deal that would give it both the UK's biggest appointed representative (AR) network, with more than 3,000 individual advisers, and its largest directly-regulated service business, supporting more than 1,500 firms.

David Brunning, director of Sussex-based IFA Brunning Newman Houghton, says firms may be seeking the “protection” of a network, but only as a short-term solution.

“Our view is that it is better to go it alone, but the truth is some firms get driven to networks in cycles,” he says.

“I see a number of small businesses concerned about capital adequacy and they may seek the protection of a national or network, but I don’t think anybody wants that as a long-term solution.

“Networks may see a real swell in numbers as firms cope with the RDR but, as soon as they have built up their resources again, there will be yet another exodus.”

When asked where they think their firm will be this time next year, eight in 10 panel members said they believe they will be where they are now, while 5% say they intend to join a national or network and 9% hope to launch a joint venture.

However, when asked the same question for 2013, not a single member said they plan to be part of a national or network while 23% hope to launch a joint venture with other firms.