Consolidation of Advice Firms

Consolidation of Advice Firms – In our industry, it’s a hot topic. Rarely does a week go by without a story about some large, national financial advice firm buying a small, local Independent Financial advice (IFA) practice.

It’s also something we have seen closer to home with some of IFP’s local IFA neighbours being bought by larger, restricted firms, often called ‘consolidators’.

So, what happens if your IFA is bought by a consolidator? Here’s a few examples based on recent experiences with clients and local professionals:

Your existing adviser leaves

IFA practices are often bought to help existing advisers retire.

Whilst your adviser may be required to continue working for a couple of years to help with the smooth transition to the new company, in most circumstances they usually retire and leave the firm.

This could leave you without a dedicated contact at the firm or, in some cases, working with an adviser you don’t trust or have a relationship with.

You’re advised to move your investments and pensions elsewhere

Many ‘consolidator’ firms, who are generally nation-wide companies, are ‘tied’ or ‘restricted’. This means they have a limited scope on what they can advise on or have a limited range of products they can offer their clients.

Check out our article on independence HERE for more information on this.

Once the transition to the new company occurs, you may find you are asked or recommended to move your pensions or investments elsewhere, sometimes at an extra cost to you.

Its not uncommon for these recommendations to be made as they are in the interests of the business, not you as the client.

Your local office closes

Efficiency is often the key to large national advice practices’ success.

Administration is usually completed from one central location, such as London or another larger city.

This can often result in the closure of the local IFA office and the departure of many of the support staff working alongside your financial adviser. Its usually not economically viable for them to keep a small office open to service their local clients.

Whilst your adviser will likely still come to see you, usually at your home, you may find that you no longer have a local office to go to for meetings.

How can IFP help if this happens to me?

If you experience a reduction in service or the changes above lead to a loss of trust in your existing adviser, speak to IFP.

We can conduct a full review of your circumstances and the financial products you have. If we feel improvements can be made to your financial plans, we will make the necessary recommendations.

However, if the investments and pensions are suitable for you, we will not pressure you into making changes. Being independent, if you wish to retain what you have, we can often ‘adopt’ the plans and advise on these going forwards.

But what happens if IFP are bought by a Consolidator?

IFP have recently gone through a management buy out and introduced a new Board of Directors.

We now have shareholders in their 20’s, 30’s, 40’s, 50’s and 60’s.

The intention behind these changes is to ensure longevity for our clients.

Our aim is to be around for decades to come to forge long standing relationships with our clients and see them achieve the financial goals we have helped them plan for.

We pride ourselves on being the ONLY Independent, Chartered Financial Planners in East Yorkshire and aim to retain this status for a long time.

If you have any questions regarding this article, please contact us at [email protected] or call 01482 219325.

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