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Positive Solutions Questions Service Provider 'Pancea' As Applications Form Directly Authorised IFAs Rise
13/02/2009
Printable version
Printable version
Positive Solutions reports sharp upturn in applications from financial advisers from a Directly Authorised background.
Positive Solutions has reported a sharp upturn in applications from financial advisers from a Directly Authorised background seeking the security and benefits of joining a financially strong IFA organisation.
The leading National IFA believes the trend is being driven by regulatory uncertainty that is making DA advisers reassess their long-term business plans. It also raises questions over whether advisers should believe promises made by third-party service providers to take on the rapidly increasing burdens of regulation and compliance.
"Almost half of applications we receive are now from DA advisers rather than Appointed Representatives," said Positive Solutions chief executive Jim Reeve. "The appeal of being directly authorised - the supposed greater flexibility and lower costs - is evaporating fast.
"The truth now hitting home is that freedom comes with greater responsibility, higher cost and greater risk. Many DA advisers are wondering whether to continue shouldering that rapidly increasing burden or to instead adopt a new model where they can concentrate on giving advice to clients rather than spending increasing amounts of time and effort on administration, compliance and FSA reporting."
Jim Reeve said that advisers need to look behind the superficial 'cost-saving' promises of third-party service providers who are currently heavily targeting DA advisers.
"Service Providers are not a panacea - they won't help with the problem of rising PI premiums, run-off cover or stricter capital adequacy demands. They may charge for 'arms-length' compliance services, but won't accept liability for advice given by firms who use those services. They will not liaise with the FSA to meet its demands in areas such as visits, TCF deadline checks, reviews of pension transfers, adapting to the RDR, etc. And none of them offer a clean and compliant exit strategy with a guaranteed value.
"As a National IFA, Positive Solutions believes meeting these needs is a normal part of servicing today's IFA. Many DA advisers are coming to understand that to operate in today's environment demands scale, support and strong financial backing - it is folly to try to do it alone.
"In addition, through initiatives such as our Learning Academy we are committed to helping our IFA partners maximise their business potential by giving support and help in the areas that are most relevant to that individual IFA and to creating an environment of like-minded people keen to share ideas and overcome barriers."
In conclusion, Reeve warned that: "There is a continuing misconception in some quarters that the banking crisis and the unfolding debate on City regulation will mean small directly-regulated IFA businesses can somehow fly under the FSA's radar. Quite simply, this is foolhardy in the extreme."
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The leading National IFA believes the trend is being driven by regulatory uncertainty that is making DA advisers reassess their long-term business plans. It also raises questions over whether advisers should believe promises made by third-party service providers to take on the rapidly increasing burdens of regulation and compliance.
"Almost half of applications we receive are now from DA advisers rather than Appointed Representatives," said Positive Solutions chief executive Jim Reeve. "The appeal of being directly authorised - the supposed greater flexibility and lower costs - is evaporating fast.
"The truth now hitting home is that freedom comes with greater responsibility, higher cost and greater risk. Many DA advisers are wondering whether to continue shouldering that rapidly increasing burden or to instead adopt a new model where they can concentrate on giving advice to clients rather than spending increasing amounts of time and effort on administration, compliance and FSA reporting."
Jim Reeve said that advisers need to look behind the superficial 'cost-saving' promises of third-party service providers who are currently heavily targeting DA advisers.
"Service Providers are not a panacea - they won't help with the problem of rising PI premiums, run-off cover or stricter capital adequacy demands. They may charge for 'arms-length' compliance services, but won't accept liability for advice given by firms who use those services. They will not liaise with the FSA to meet its demands in areas such as visits, TCF deadline checks, reviews of pension transfers, adapting to the RDR, etc. And none of them offer a clean and compliant exit strategy with a guaranteed value.
"As a National IFA, Positive Solutions believes meeting these needs is a normal part of servicing today's IFA. Many DA advisers are coming to understand that to operate in today's environment demands scale, support and strong financial backing - it is folly to try to do it alone.
"In addition, through initiatives such as our Learning Academy we are committed to helping our IFA partners maximise their business potential by giving support and help in the areas that are most relevant to that individual IFA and to creating an environment of like-minded people keen to share ideas and overcome barriers."
In conclusion, Reeve warned that: "There is a continuing misconception in some quarters that the banking crisis and the unfolding debate on City regulation will mean small directly-regulated IFA businesses can somehow fly under the FSA's radar. Quite simply, this is foolhardy in the extreme."