When is an independent financial advisor not independent?

[Deleted User]

DT2001 said:

Zagfles

Are you really suggesting that an IFA spends years building a business and then when retiring doesn’t sell his goodwill?
Just think back to when banks took over small building societies. It wasn’t usually in the customer’s best interest as interest paid often dropped, mortgage rates increased and personal service faded away.
We should be concentrating on ensuring customers know their options.

We, the clients, as owners of building societies, did the “selling”. And we got paid for it.  My mortgage interest rate did not go up when Alliance & Leicester got sold by us.  Interest rates are determined by competition. Its called “market”. 

 In this case an IFA is doing the underhand selling and is getting paid for something that is clearly against his clients’ best interest. And as is obvious from the post, the client has no clarity on !!!!!! is going on. 

zagfles

DT2001 said:

Zagfles

Are you really suggesting that an IFA spends years building a business and then when retiring doesn’t sell his goodwill?
Just think back to when banks took over small building societies. It wasn’t usually in the customer’s best interest as interest paid often dropped, mortgage rates increased and personal service faded away.
We should be concentrating on ensuring customers know their options.

When banks took over small building societies, the members got paid! And got a vote on it! Are you suggesting IFAs selling their business should give their customers the proceeds?

Fine to sell your business, but if you've built it on the basis of being an independant adviser and extolling the virtues of IFAs over FAs, it's utter hypocrisy to sell your clients out to an non-independant advisory firm.

DT2001

Deleted_User said:

We, the clients, as owners of building societies, did the “selling”. And we got paid for it.  My mortgage interest rate did not go up when Alliance & Leicester got sold by us.  Interest rates are determined by competition. Its called “market”. 

 In this case an IFA is doing the underhand selling and is getting paid for something that is clearly against his clients’ best interest. And as is obvious from the post, the client has no clarity on !!!!!! is going on. 

Maybe I’m wrong but I thought the B. Societies were considered undervalued and there were quite a few carpetbaggers.
A study by MP’s in 2005 backs up my assertion that in most cases customers paid more for their mortgages as did a study by Which.
So it wasn’t, IMO, in their best interests.

I agree that the OP was not clear what was going on but hopefully is better informed now.

DT2001

zagfles said:

DT2001 said:

Zagfles

When banks took over small building societies, the members got paid! And got a vote on it! Are you suggesting IFAs selling their business should give their customers the proceeds?

Fine to sell your business, but if you've built it on the basis of being an independant adviser and extolling the virtues of IFAs over FAs, it's utter hypocrisy to sell your clients out to an non-independant advisory firm.

Members owned mutual building societies and the IFA owns their business so not suggesting they give anything the their clients.

So you agree an IFA can sell his business? I know on this forum IFA’s extol their independence (and rightly so) but you do not know how the OP’s IFA marketed his business. It would be hypocrisy to sell your business IF you had extolled the virtues of independence, I agree. 

Jonesy1977

By way of update....... when I outlined the fact that any gain in the equity element of my SIPP would have to be between 5-8% annually just to cover the advisor fee and that as they could not advise on the product I am invested in anyway, they agreed to terminate immediately and following a discussion with the SIPP provider, not only do I not need an advisor attached but they strongly suggest that if I did it should be an IFA not an introducer.  Lesson learned! Thanks all 

Freecall

Unfortunately this whole issue speaks volumes to a lack of true professionalism within the finance industry as a whole.

Window cleaners sell their clients (or their 'rounds' as they would call them).

Doctors don't sell their patients.

A true, long term, on going professional relationship has a high value but it is not simply a monetary one.


(Ok, I know doctors do sell their patients in the US and some other countries but not in the UK)

dunstonh

Doctors don't sell their patients.

Yes they do.   GP practices are bought into and available to sell their share to others.

Window cleaners sell their clients (or their 'rounds' as they would call them).

The new window cleaner could be better or could be worse.  The client doesn't get a say in the round being sold.  But they get a say on whether they continue to use them or not.

Just as the case is with financial adviser firms.   As long as you stay with an independent, then any IFA can be appointed to your investments etc.     So, if you dont like the new one or the new one decides to change their business model in a way you dont like, then you just change to another one.  Just like most areas of business.

Unfortunately this whole issue speaks volumes to a lack of true professionalism within the finance industry as a whole.

Ok, lets see how honest you are then in this scenario.    You have a business and are retiring.     Three buyers have shown an interest.    The best independent price is £3 million.    SJP offer you £8 million and another national tied salesforce offers you £5 million.      Which would you accept?    

You wont find independents paying anything near what the tied companies will pay at this time.

Linton

Jonesy1977 said:

By way of update....... when I outlined the fact that any gain in the equity element of my SIPP would have to be between 5-8% annually just to cover the advisor fee and that as they could not advise on the product I am invested in anyway, they agreed to terminate immediately and following a discussion with the SIPP provider, not only do I not need an advisor attached but they strongly suggest that if I did it should be an IFA not an introducer.  Lesson learned! Thanks all 

So it looks like all sides acted appropriately.  A small business was sold as is reasonable.  The new owners agreed they were unable to provide the service the OP required and so the OP can move elsewhere without hindrance.  

[Deleted User]

Not really. Ongoing “financial advice” is for people who need hand holding. They sacrifice tens if not hundreds of thousands of pounds expecting that the advisor completes his fiduciary duty and would work in their best financial interests.  In this case the advisor tried to pocket something at his clients expense. Wasn’t just a sale of his business. He needed the client to buy an inappropriate service so he could pocket the royalties.  There was a clear attempt to push the client into something that’s completely inappropriate and not in his interest.  The advisor did not say “by the way, I am selling my business to someone who can only sell services you should not buy”.  Blatant conflict of interest. 

zagfles

dunstonh said:

Unfortunately this whole issue speaks volumes to a lack of true professionalism within the finance industry as a whole.

Ok, lets see how honest you are then in this scenario.    You have a business and are retiring.     Three buyers have shown an interest.    The best independent price is £3 million.    SJP offer you £8 million and another national tied salesforce offers you £5 million.      Which would you accept?    

You wont find independents paying anything near what the tied companies will pay at this time.

The age old question in the financial services industry, the choice of whether to act in your own interests or that of your customers. Actually in all industries, but for some reason a lot of people seem to be gullible enough to believe that those selling financial services are acting in your interests not their own. Whereas they never would if they went to see eg a car salesman. 

Do I suggest an endowment or repayment mortgage. Do I suggest leaving a final salary DB scheme and taking out a private pension. Do I recommend PPI with that loan. Do I recommend pointless credit card fraud insurance. Do I recommend a DB transfer. Should I sell my clients to someone who'll do a good job at a fair price or someone who'll charge them a lot for restricted service but pay me a lot more.