What price independence?
So, we had polarisation under the PIA. Then the FSA depolarised us. Now, the RDR is promising to repolarise our profession and make the distinctions between 'tied' or limited advice and 'independent' advice crystal-clear to the customer.
So that's OK then. Except that it isn't. If 'independent' financial intermediaries were genuinely what they seem to be then I guess that I would not be raising a concern. The problem is, they're not. There's a bit of smoke and mirrors stuff going on here, it seems to me - and the net result is that (yet again) the poor client is going to lose out.
I carried out a little research into the four largest UK financial intermediaries purporting to offer a framework for independent financial advice. In the process, I discovered just how few of the 'little guys' are actually left - these four account for a huge proportion of the UK IFA market. The big surprise is who owns them - take a look at this:
|
Network/National IFA
|
Owner
|
| Sesame Bankhall |
Friends Provident |
| Positive Solutions |
Aegon |
| Bluefin |
Axa |
| threesixty services |
Just Retirement Solutions |
Now, I'm no full-time conspiracy theorist, but I don't think it insignificant that these big insurance groups have been quietly mopping up the UK's IFA community. The fact that it is sometimes actually quite difficult to determine ownership, even when using credit-rating resources, does tend to raise one's eyebrow. And given the UK's current penchant for M&A activity (fiddling whilst Rome burns), you probably won't be too surprised by the degree of penetration of the intermediary market by these big insurers.
Am I being reactionary in raising concerns? No doubt the Networks/National IFAs in question will protest their independence. No doubt they will point to regulatory controls in place. However, the international scene does provide quite convincing evidence that these same or similar) holding companies do influence intermediary choice: in Australia, intermediaries owned by AMP placed 83% of their business with AMP. Those owned by Axa placed 78% with Axa. I don't have figures for the European market, but the fact that intermediation has been largely controlled by banks and insurers sends its own message. And these are, certainly in two of the above four examples, the same insurers.
Why is so much of the UK IFA market now owned by these big insurers? Well, I guess you'll have your own answers to this. Given the erosion of the traditional IFA business model, and the huge challenges raised by the RDR, it does seem to me to be all about distribution - and that doesn't spell the most positive future for IFAs, does it?
P.S. 2020 Financial Services Ltd remains fully independent of all vested interests, run by IFAs, for IFAs. | 