Consolidation boom brings back memories of pre-RDR days
Advisors fear that Retail Distribution Review (RDR) gains could be threatened by aggressive consolidators.
Platform providers have recently taken over successful consultancies in large numbers, leading to growing unease about their impact on the industry.
Aviva announced on Wednesday March 2 the acquisition of IFA Succession Wealth for £385 million to strengthen its presence in the advisory market.
The announcement sent ripples through the industry and dominated the conversation among advisors at the Lang Cat HomeGames webinar yesterday.
Concerns have been raised about the motivation of these large companies and the impact on customer results.
Host Natalie Holt asked if this latest acquisition would undo gains made since the RDR was introduced in 2012.
Informed Financial Planning chief executive Kevin Ferriby said history is not on the side of these big companies.
He said, “We’ll see, won’t we? But suppliers in particular aren’t used to doing the right thing for long-term customers.
Ferriby has already ruled out selling its IFA companies to consolidators despite attractive offers. He said it wasn’t just about the money for him.
“For me, a huge thing was that I wanted to take care of the people who have taken care of me over the years, which is our staff, our clients and our introducers. I didn’t want to destroy our identity and our culture that we have been building for a long time. I didn’t want to put people’s jobs at risk,” he said.
True Wealth Planning Solutions managing director John Baxter echoed a similar sentiment.
He called on the consulting industry to see the consolidation boom as an opportunity to design its own manufacturing capacity.
Baxter said: “I love to see the continued emergence of the consulting industry that has designed its own manufacturing capability to act in the best interests of its customers rather than being viewed as a distribution outlet for someone’s product. another.
“I think that’s really where the opportunity lies. Scale is essential, access to capital to provide that scale is essential, but I’ve always been part of businesses run by planners. While I commend everyone involved in the Succession business for what they have accomplished, I don’t see this path we will ever want to take. »
Fairstone COO Adam Smith hopes DFM’s entry into the financial planning space will benefit the industry and that it will be led by an advisor rather than a vendor.
“I think if that holds true and as long as customers remain at the heart of it rather than profit margin, that’s a good thing for the industry.”
He said the sector will not want to go back to the Wild West days before the RDR.
“We are now in a more transparent and professional industry. And that has to be at the center of it. It can’t be cheap talk, it has to be meaningful action. Centralized investment proposals are more targeted. Using solutions is not the domain of large scale financial advisory firms.
“Pretty much every financial advisory firm probably has a more focused product set than it did five or six years ago. And that just reflects that there is a scale advantage that normally concerns the customer.