The route to becoming directly authorised has become more difficult and advisers are “struggling”, according to panellists at the FT Adviser Financial Advice Forum.
Elliot Smith, financial adviser at Wealth Spring, discussed the pros and cons of being in a network as opposed to directly authorised.
He said: “Joining a network has its drawbacks but also its benefits. For me, in terms of going to market, becoming a network member was a lot simpler and a lot faster.
“Becoming directly authorised, the route has gotten more difficult, and many people who are trying now definitely struggle. So becoming a network member can also be seen as a great way to market and still be independent.
“My proposition doesn't look anything different to what it was if I was directly authorised, which I really appreciate.”
Smith added that being in a network allowed him to focus on the things he wanted to do more which was bringing on new clients.
He also said being in a network was simpler as it handled many of the regulatory requirements like personal indemnity insurance.
Rakhee Wood, independent financial planner at Butterfly Financial Planning, spoke from her own experience of being in a network and then going directly authorised, calling it a “stepping stone”.
“I came from bank assurance which is a restricted world, and I felt I needed that stepping stone. I thought it would be too much to go from that to running my own independent, directly authorised firm.
“I had lots of support, there was compliance, all my systems were done. I learned a thorough process and the right way to do things before I felt confident in setting up my own company,” she explained.
Rebecca Bonner, IFA at Cove Financial Planning felt it was not “absolutely onerous” to be directly authorised rather than in a network.
She said: “Lots of people seem to think, you are on your own and it's so overwhelming the FCA regulation but actually, if you team up with good people around you I have a great compliance person and she is very straightforward.
“We don't have prescriptive rules, so it's all about what size business you have, and how do you make sure that you can run it in a way that's suitable, that gives good outcomes for clients, and so it's not absolutely onerous.
“With good systems, you're starting from scratch. So you choose your systems. You choose the outputs you need those systems to have. You make sure that your reporting is clear and consistent from the beginning.”
Bonner discussed how the FCA were encouraging her to go down the appointed representative route when she originally was looking to set up her firm.
“One of the FCA’s worries was if you could actually run a business. So lots of advisers are really good at running the client portfolios, organising the tasks, making sure the work gets done, ticking all the boxes, but the actual business side of it can be trickier.
