With news that Positive Solutions has parted company with around 50 low producing advisers is it the end of the line for the IFA as a lifestyle?
Some things suggest it. It is not as easy to make a living – not that I am suggesting that it has always been easy up till now – though in some years it has been.
Exams and model changes will certainly make it more difficult to justify being a part time IFA or dipping in or out of advising.
Finally and maybe most importantly businesses that support advisers, such as Positive Solutions, and perhaps other network type structures, may no longer feel they can support such IFAs.
Low business figures, as Jim Reeve notes, do not really support the associated risks.
Finally, Positive Solutions, has long been regarded as a safe and cost effective way to allow advisers to advise, so though of course it supports high producers – indeed I have met some spectacular examples – it has also given a home to lower earning businesses too.
However, like all things in financial services this may be too easy a prediction. First, I am pretty sure that not all these IFAs are also part time taxi drivers for example. The lifestylers may have been involved in property development, or estate agencies or other related financial services activities. There will be some who will have been extensive buy-to-let landlords.
Some, with an eye on the reputation of the industry, may say any departure of those not fully committed to advising would be a good thing. I tend not to agree. If standards of good advice can be demonstrated why should anyone be worried about the business efficiency of such individuals, or how long it takes to advise their clients, though I would baulk say at someone returning to advise on the occasional income drawdown scheme or tax and trusts.
However, if they are not attempting something too complex, do we want that advice point of contact to be lost say to those reaching retirement – when an adviser could make a referral to an expert to keep people being advised properly.
I also worry about any loss to the advising infrastructure. It has been by showing extraordinary business flexibility that so many advisers continue to operate.
However I do think that being an IFA as a lifestyle will at the very least less be of an option in future unless you are very good at managing that lifestyle too. Many will say it is the price we pay for professionalism.
It also shows the the big groups are making tough business decisions – rubbish news for the advisers concerned, but maybe better for the overall health of those firms long term.
Really interesting concept at the start of this piece is that ‘low producing’ equates to the same as ‘lifestyle’.
I do not doubt there is a current contraction in the numbers of advisers who run their lives as described in this article, and I actually think that losing them from the industry is not a bad thing.
If asked, most people would like to do as little as possible in their occupation for the maximum reward, and in the old days of the industry this meant taking 6% on a bond then sloping off for some golf or a beer. When I started in the industry only 13 years ago, I remember how difficult it was to get hold of people on Friday afternoons!
The difference today as far as I see it is that advisers are restructuring their businesses through effective outsourcing, building defined models or simply having an equitable charging structure, with the aim of generating more time for themselves which are then able to reinvest in further developing their business (what is the opposite of a vicious circle?!).
Most are not looking to do this in order to rule the world, but to generate efficient businesses so that the business runs itself and the adviser can take an ambassadorial role for their firm.
The analogy would be that in the old days, the lifestyle adviser may have acted like a salesman, who bunked off once he has reached his target, whereas under the new model he is a Chief Executive who takes a lower contact, but more strategic role in their business.
So, I can actually see a really positive place for the new lifestyle adviser, but in a form that benefits their clients as well as themselves, because after all the people who will succeed most in the coming environment for financial planning are those who have not lost sight of the fact that the client is the most important part of the whole equation.