To Network or not.....that is the question?
Written on 01/08/2019

So here is a question for all you small advisory practices out there, why on earth wouldn’t you join a network? Alternatively, why on earth would you join a network? 

It may seem an unusual question, given what we do at IFAC but I feel it is an important one to put out there, what reasons would an adviser have to join or not join a network? 

There are likely many different reasons why you might want to be in a network but I want to look at what I feel are the most common and logical ones. 

  1. You want to give all compliance control to someone else and they tell you what to do
  2. You have no experience in running a directly authorised business
  3. You don’t have the time to spare to be three things, adviser, business owner and compliance officer
  4. You are new to the adviser world and don’t know any different 

There are also many different reason why you might not want to be in a network and these might include: 

  1. You want to maintain control over your own business as quite frankly, it is your business and you say what goes!
  2. You want to operate in the most cost effective manner possible (not paying for services that you can’t or won’t use)
  3. You don’t wish to operate under someone else’s governance/hang-ups/fears 

Allow me to be direct here, a network wants to cover itself from risk and possible litigation, there is no way around that, no matter what they claim, their rules are often to protect themselves and not to help you as an adviser (take for instance one network telling all advisers that anyone under a certain age is automatically a cautious investor – never have I heard such a bizarre rule and surely it is contrary to “know your client” in every way! But it is another way for the network to ignore their members and cover their own butt) 

Take another example of a network north of here, that denied a DB transfer for a client that was terminally ill and their DB scheme did not have severe ill health provision (crazy right?) 

So if you are in or thinking of joining a network then beware, in some cases it is like joining a cult or sect, you hand over high fees every month and you do as you’re told, if you disagree then you are treated as “argumentative and difficult” and it becomes harder to get business through the “helpful” compliance people (I speak from very unpleasant personal experience here) 

But for some advisers it just works a bit like a repayment mortgage, it’s expensive but gives them something intangible, peace of mind and I can’t argue with that. However I personally feel that it is a very outdated way to deliver advice and rather contrary to the way that the FCA have set up their governance of our industry and seems to want to drag us backwards, making us either scared to or just unable to deliver quality advice at times and you only need to look at DB advice (I know scary stuff but it is still my "bag") to see how many advisers have been frightened out of it by networks, never mind the FCA rules, it is in my opinion the networks that have added even more on top and killed the advice market for this.

Now as an adviser you probably want to do a few things: 

  • You want to deliver good quality advice
  • You want to run your business profitably and efficiently
  • You want the freedom to develop and steer your business your way
  • You want to retire at some point
  • You don’t want to work 70 hours a week (let’s be honest who actually does want to?) 

So the key element here is actually control. 

If you have set up a business and taken the risk involved and gone through all the sweat and stress and managed to make it successful, why would you then hand over operating control

The logical answer is that you wouldn’t, you’d keep control over how you run your business, so joining a network would be the polar opposite of your business model I feel. 

Now of course I am writing this so that I can sing IFAC’s praises but I genuinely believe that our model works for the right advisers. 

You run your business your way BUT you get us to place a hand on the tiller with you. 

We won’t make you row the boat while we steer it wherever we feel we want to go and then charge you for the privilege! 

We won’t introduce rules just to protect ourselves at your expense, we will  help you to meet your compliance requirements within your own business model, that’s the difference between using external experts and handing over the keys to your car to a stranger that is primarily looking to use your car to drive themselves where they want to go (you have to come along whether you like it or not) 

IFAC is about you accessing expertise, yes sometimes I use words such as “you need to” and “you should” in reviews that I do but the stronger the tone, the more important the point I am trying to make. The big difference here is that after we have advised you, we trust you to get on with things, we don’t expect you to hand in your homework several times so we can scrawl across it in red pen, delaying your business, often by weeks. 

We also and this is a huge bone of contention with me, won’t be vague about any development needed, we will actually tell you, we will try to train you and not let you guess! Nothing is more infuriating to me than an organisation that tells you “there is work to do” but won’t bother to tell you where or why…..! 

So the upshot here is, if you are in a network and you don’t like being subordinate to their plans, wishes, fears and hang-ups, there is a better way……work with someone not for them! Partner with a trusted supporter that will keep you compliant but not look to kill your business to satisfy their own needs, while charging you huge fees.

That’s the IFAC way!

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