Advisers Divided on Future Independence

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Do you believe that independent advice practices will become extinct?
  • No (49%)
  • Yes (41%)
  • Not sure (9%)

Adviser opinion is evenly split on the question of whether truly independent advice practices will survive into the future.

Responding to our question about whether the independent advice practice will become extinct, 49% of respondents have so far said they believe the independent adviser will become consigned to history, while 46% believe the independent adviser will survive and prosper.

Last week, we outlined a number of current factors that could potentially contribute to the demise of true independence in the advice space:

  • Unintended consequences associated with the introduction of the FoFA reforms, eg implementation of new compliance systems and accounting for increasing compliance costs to the practice
  • Institutions continuing to take strategic shareholdings in boutique groups in order to boost numbers in their adviser networks
  • Heavily subsidised fees offered by institutionally-owned licensees to advisers operating under their license(s)
  • Additional significant resources being made available to advisers by institutionally-owned licensees

Based on the responses we received, there appear to be two schools of thought:

  1. FoFA regulations and the financial, compliance and logistical service leverage available to the ‘big end of town’ will make it almost impossible for independent advice practices to be maintained and to grow; or
  2. Once the dust settles on FoFA, advisers will see that compliance will be easier to accommodate than is presently perceived, and independent/non-aligned groups will emerge once more as a force

Historically, the industry has seen boutique advice firms and independent licensees evolve and adapt to economic and regulatory circumstances in order to deliver their unique and/or tailored propositions to existing and prospective clients.  The question is whether this cycle will continue, or be largely snuffed out by the current economic, regulatory and structural advice environment.

Which scenario do you believe is more likely?  Or do you support an alternative theory about the future for independent advice in the financial services industry?  Let us know what you think.  Our poll remains open for another week…



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3 COMMENTS

  1. There seems to be a very good chance that independent dealer groups wil become extinct. The big institutional groups like the banks and large life offices, which are in themselves becoming fewer, have much financial clout. If they offer special terms to advisers to go with them advisers will likely feel they have little choice if they want to continue in our industry.

    Then we will have come full circle effectively becoming tied agents all over again! ‘Never has so much time been spent by so many for so little gain’! Cynical – it sounds like it, but that’s the way it seems to be heading.

  2. Paul
    I believe when all the FOFA issues are in force and practices see that it is just a hump, not a high brick wall, there will be a gradual return to the independent dealer groups. Advisers got scared and ducked for cover-hopefully they did not sell their “soul” and are not locked into agreements. Big instos are only interested in profit, advisers are just numbers and clients are just next please. It is much more pleasant being in control- not being controlled.

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