Positive Solutions IFAs - Any Experience?

mr_fishbulb

My girlfriend and I are thinking of speaking with an IFA for tax, pension and investment advice.

She's been given a name at Positive Solutions by one of her work colleagues. I can only see 1 reference to them on this forum, and that's back in 2006.

Does anyone have any experience of them? Many thanks

dunstonh

Postive solutions are not IFAs. They are a network for IFAs. Well, they are a sort of hybrid...sort of. (I will explain at the end but first you need to understand what a network is).

A network is a company that provides support services to small IFAs. Things like compliance, research, training, news etc. The IFA pays the network and buys the services they want. For example, every firm has to have a compliance officer. However, the typical wage for one of these is £30k. So, instead of employing a compliance officer, you pay a network to take on that role and they supply one who will cover the local firms in your area who also belong to that network.

You cannot measure the quality of an IFA by their network. You will have no contact with the network. It would be like measuring the quality of the local cornership by the quality of the wholesaler they buy their stock from.

Networks do offer the consumer some security over those IFAs which are directly authorised. For example, they typically check the quality of the business that the IFA firm is writing to make sure it is complaint and rules are being met. A directly authorised firm has to do the same but they use their in-house officer to do that whereas the network is a third party. Also, if a directly authorised IFA closes for business, any future claims would be handled by the FSCS. However, if a networked IFA closes for business, the network still take on the liability. Only if the network closes would you then be referred to the FSCS. So, it gives an extra layer for you.

The FSA seems to prefer networks/support service providers and the RDR proposals for 2009 (changes that are coming but still under consultation) suggest that networked advisers will get a lighter touch regulation than directly authorised firms due to the difference in quality of compliance between them (apparantly networked IFAs are typically more compliant than directly authorised ones - obviously generalisations will always give exceptions. I personally know some very good directly authorised IFAs and some rubbish networked ones).

Back to my first bit where I said sort of. Networks can vary in quality and business model as well. Some leave the IFA to run their own business and are just service providers. Others are quite intrusive and almost run like a salesforce. Although I have no personal experience of Postive Solutions, my understanding is that they closer to a salesforce style than a proper network.

mr_fishbulb

Cheers dunstonh. I'll think we'll go with the recommendation for this chap.

dunstonh

Ask for research first. Even if you dont fully understand the research, you should be able to tell from the data given to you if time has been spent researching and if the research is quality or not.

Ask questions. Why? is the best one to ask. If it is investments, then remember that single fund solutions are rarely the best option and that there should be some sort of strategy for the investment. It maybe asset or sector allocation or high yield or something.

If tax wrappers are discussed and investment is under £100k and an investment bond is recommended, then be on guard. It could be the right advice but with recent CGT changes, unless you meet a certain criteria, investment bonds are not likely to the best option. They can be but it is a minority now. Yet they are still being recommended far too often.