I must start by stating this certainly does not reflect what we’re seeing. Indeed, we are receiving an increasing number of enquiries from directly authorised (DA) firms about joining the network as they see the value and protection in light of access to lenders, providers, PI increases and the ‘senior managers’ regime on the horizon.
Role of networks
However, if there are increasing numbers of brokers looking to go it alone then I think as an industry we need to look at the role networks play, the value they can offer and whether or not that value is actually being delivered.
There are of course benefits to both options.
Direct authorisation may allow firms and advisers to step into more complex advice scenarios, however the increased risk will typically come at a cost.
The increasing number of complex or non-standard client advice situations will inevitably mean that DA firms will need to implement robust systems and controls and have in-house expertise to manage these.
And this, I believe, is where networks add real value. The support of a network provides the framework for firms to deliver advice in these areas without having to develop an infrastructure to do so.
In today’s market where complex and specialist products are becoming more popular it is becoming essential for brokers to widen their remit and engage with areas they might otherwise have ignored.
The second charge market shows no sign of slowing down while equity release continues to soar in popularity.
Setting up the systems and processes to operate in these areas is costly and time consuming in the first instance.
A good network can help its brokers by providing the tools and expertise to reduce the burden.