Clearly, you can read a lot into any sort of polling, but I was intrigued to see a story in this very publication suggesting that, while the majority of firms are happy with their current regulatory status, over a quarter – 26% – are considering changing from appointed representative (AR) to directly authorised (DA).
Having known many firm owners who have not just considered this move, but actively achieved it, I’m acutely aware these decisions are not taken lightly.
In fact, given the time, resources and money it is perceived to cost to move out of a network – and there is a whole other article to be written about the severe and unnecessary obstacles that are often placed in a firm’s way by their existing principal – you have to be very clear that what you are not getting is worth such a move.
For what it’s worth, I believe that for significant numbers of firms, particularly those that have been active for a number of years, and have strong experience, good management, and an excellent understanding of what is available in the marketplace, there is much to be gained and little to be lost by making the move.
Advising with no limits
Indeed, again having talked to many firms who have already made the journey, the common experience tends to be based on what they couldn’t do within their network, rather than what they were able to do.
Building a better PRS for all
With already complex regulation on landlords today and more changes on the horizon, Heather Cara,
Sponsored by BM Solutions
Make no bones about it, there are opportunities opening up right across the mortgage and wider finance market that many firms will want to take advantage of. However, if the current network isn’t in a position to sanction this activity, or is risk-averse in that area, then the firm could effectively be left sitting on its hands or simply having to refer on.
This is an interesting conundrum, particularly within a Consumer Duty environment that places significant responsibilities on advisory firms to be offering holistic advice right across client needs, and often way beyond traditional mainstream mortgages.
We’re all acutely aware that Consumer Duty is the regulator’s attempt to ensure consumers – the vast majority of whom may only ever see a mortgage adviser in their lifetime – get advice in as many areas as possible, even if they are only seeing one individual or firm, which makes it doubly important for that individual or firm to be able to have access to a wider range of products and solutions.
If those products and solutions are simply off the table because a network won’t allow the firm to advise on them, then where does that leave the firm? Not just in terms of the regulatory situation but also from an income and advice opportunity perspective, whereby the client displays a want or need, the adviser acknowledges it but then can’t deliver the recommendation, or earn advice income, because it is deemed off limits.
As this becomes ever more deeply embedded in the advice arena, it may well feel like an opportune time for AR firms to look at what they are able to offer, what they need and want to offer, and to choose a different authorisation route in order to be able to deliver for their clients in a whole host of areas.
An advice offering suited to current needs and requirements
This feels particularly pertinent, for example, in an area like later life lending where the silos that have existed begin to melt into one another, and where new products available to a ‘younger’ older borrower become more prevalent, but where many mainstream firms can’t offer advice in this space due to not have the necessary permissions or qualifications, and not having a network principal willing to sanction their involvement.
Firm maturity also plays an important part here and I’ve not met a fairly established business that didn’t want to have greater control of its own future, such as what systems and processes they can use, where they can place business to benefit the most or what compliance resource they can access.
We are an increasingly mature marketplace – regulation is deeply embedded in our sector. The need and demand for advice shows no sign of dipping, established businesses can seek and secure strong growth – and with many more firms of this ilk, it is understandable they want to move forward at their pace and don’t want to be held back.
I suspect that, while the network offering will remain the choice of many newer businesses who welcome the security and the structure, those who gain any sort of foothold in the sector, who become comfortable with their path and where they want to head, and who want to ensure they are not missing out on any advice opportunity, will increasingly want to become DA so they can secure their own futures and benefit from all that is available beyond the necessary confines that a principal partner has to have in place.