SIFA's Ian Muirhead explains how to make solicitor/adviser tie-ups work for both parties...
The recent furore over solicitors’ client referrals has highlighted the increased importance of financial services to solicitors in the post-Legal Services Act world.
One of the principal objectives of the Act is to encourage competition in the legal services market.
Many solicitors will find it difficult to compete against the new entrants who, in most cases, will be adding legal services to an existing related service and making greater use of technology in the form of online standard documentation and superior database management.
When it comes to solicitor tie-ups, don't think 'referrals', think 'collaboration'
Many solicitors’ Achilles heel is their dependence on transactional business and the consequent lack of ongoing contact with clients. Most are also overly risk averse, disinclined to involve themselves in business management, and shy of anything which smacks of salesmanship.
However, they do have two attributes which make them potentially attractive partners for providers of complementary services, namely under-utilised client banks and a professional status in the eyes of consumers.
From the point of view of financial advisers, there is also a clear business synergy between legal and financial advice, notably in the areas of older clients, estate planning, matrimonial affairs and investment for trusts and personal injury awards. However, many financial advisers have found it difficult to prise solicitors out of their shells.
Part of the problem has been an insufficient awareness of each other’s role and the assumption that each exists in a silo and the only thing in common is the client. The key, therefore, is to think in terms not of client referrals but of working together.
In the multi-disciplinary world created by the Legal Services Act, the dividing lines between the professional disciplines will give way to trusted advisers, of whatever discipline, who are able to provide holistic advice to identified categories of client.
The Legal Services Board is already discussing moving towards “activities-based” regulation, in which being a solicitor would not in itself equip the practitioner to practise in particular specialist areas of the law.
For the financial adviser, this means understanding and being able to complement the solicitors’ advice with whom they work – that is to say, matching business specialisations.
Bearing in mind that most financial services work is oriented to the private client, and that most private client solicitors are also members of the Society of Trust and Estate Practitioners (STEP), a good starting point for an IFA is to obtain the STEP Certificate for Financial Services (Trusts and Estate Planning), which admits holders to the STEP community.
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