27th October 2010

The silence of the networks

IFA letter of the week

If an IFA's business has income of say �£100K 50/50 initial and trail and a Network takes 15% then the Network earns �£7,500 on initial and �£7,500 on trail i.e. �£15K per IFA member.

If as AVIVA predicts, 50% of IFA's are binned post RDR 2012 then the Network with lose the 15% on initial (�£7,500) but gain 100% on trail i.e. �£50,000. The entire trail reverts back to the Network so instead of earning just �£15K they then take 100% of the trail i.e. the Network gains the former IFA's �£50K trail.

Not a bad swap �£15K for �£50K, especially when the practice buyout of a Network is based on trail fees?

Shareholders and corporate law dictates the response of Network directors. Asking a Network director to vote against RDR is like asking a turkey to vote for Christmas. This is a regulatory gift and explains why we have the Silence of the Networks!

Networks also fund AIFA!

Now do you understand why you can't rely on your Network or AIFA to represent your interests and why all IFA must take action?

The words 'stitched up like a kipper' come to mind.

Simon Mansell
Temple Bar IFA Ltd

Panacea.com: Some interesting comments in the RDR LInkedin group

RDR, Adviser Letter of the Week