Why did DC&A Independent Financial Advisers decide to become DC&A Financial Planning on 1 January this year?
The St Helens-based business decided to drop its independent status after selecting never to advise on unregulated investment schemes - no matter their apparent suitability for a client.
Following advisement from the Financial Conduct Authority (FCA), the business said it was told it could no longer call itself 'independent'.
However, for DC&A managing director David Cathcart, little, if anything, has changed.
"If you know you are going to spend 30 or 40 hours trying to prove you are an IFA, what's the more cost effective route? Just go restricted and carry on being independent which you've always been. It has worked very well for us and the clients have benefited from it."
And how about this? DC&A Independent Financial Adviser continues as a trading name under a wider holding company so, if a client demands independent advice from DC&A, they can get that too.
The Financial Conduct Authority has released a report suggesting the vast majority of firms that claim independence are meeting its requirements.
A total of eight firms from a sample group of 90 'IFAs' breached its rules in some way, it found.
But, according to Cathcart, his customers are seeing multiple benefits from his shift to restricted operations.
"Ironically, what it has allowed us to do is to go and negotiate a reduction in charges for our clients with the providers we've been using for many, many years as an IFA. We have obtained just under a half per cent reduction in charges for most of our client across most of their investments. We could never have done that as an IFA."
Though it benefits commercially from its new regulatory label, Cathcart said the firm still considered itself independent because of the work the advisers do.
"This was our choice. We could be IFAs if we wanted. If we had wanted to recommend unregulated offshore investments, we could. We've got the permissions. We choose not to."
He continued: "We were just true to ourselves. We said: ‘if you look inside the practice when we get a new client through the door, do we start from scratch or do we have a good idea of what we are going to do for them?' You don't re-invent the wheel on every client. If you did you'd never make any money."
For this reason Cathcart also questioned whether many current IFAs were truly independent. "There is no independent financial adviser because they all use people that they know or panels that they've used," he suggested.
DC&A's clients were unconcerned either way, Cathcart claimed. The firm did a poll among its clients before going restricted and found they were mainly concerned about whether or not the firm was going to change the way it was doing business, not its label.
"What's in a name?," Cathcart said. "Clients don't care as long as they get impartial advice." As for the general public, "only one client has ever asked if we offer independent or restricted advice. I asked him: 'Do you know the difference? He said: 'No'."
For Cathcart, the terms 'restricted' and 'independent' are confusing.
"We should have financial advisers and company representatives," he said.
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