Brendan Llewellyn of Marketing Edge assesses the impact the ‘restricted' and ‘independent' labels will have on the sector…
Once again the question of independence arises, though this time it is less of a polarised debate. Where initially we had clear black and white distinctions – tied meaning you are an agent of the manufacturer; independent meaning you are an agent of the client – now, both restricted and independent advisers are agents of the client – at least in principle.
And restricted is not, after all, particularly restricted. It might not be the happiest of notions but, on the other hand, the independent label seems to have lost some of its lustre as advisers choose other sources of differentiation like Chartered, life planner or some form of wealth managerial status.
There is also the concern as to the feasability of the independent route – no-one can be entirely sure what this or the next regulator will look for when it assesses an adviser’s ability to look at the whole gamut of investment options.
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There is also a general concern that the whole business of sitting alone and paddling solo seems to be getting a bit more complicated. You could forgive the independent adviser for feeling a little beleaguered.
And now the regulator elect appears to be taking his daily arrival into the stuttering spires of Canary Wharf as a trigger to launch a new policy idea, some might think now is the time to seek some comfort with a warming strategic partnership or two, whether directly with a manufacturer or via some form of network.
Then there is the question of what manufacturers might offer advisers to take the restricted road. Some might call these inducements, though I would not choose such language, necessarily. But whatever they are called, they can be quite valuable where the distributor and client base is valuable - just as you would expect.
Ideas like vertical integration may start to appeal and good old ‘division of labour', where advisers are advised by manufacturers that what they are really good at is giving advice. Is this myth or reality? Because my experience is that most of the better advisers are also rather good at running their businesses...
Restricted or die?
The thing is, open architecture is a hugely attractive notion but, at a functional level, largely unnecessary for most clients most of the time.
Consumer detriment resulting from a return to more ‘closed architecture' will be marginal and, in some cases, negative. Negative detriment - now there is an idea to rally round. Restricted or die... I can almost see the t-shirt.
This article continues...
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