Standard Life have announced that they are setting up a salesforce offering restricted advice . Apparently it demonstrates the insurer’s commitment to the advisory sector.
I suspect it is a recognition that the experiment providing mass market independent advice is all but over. Most advisers are now selling products off platforms that generate income for the advisers through a share in the AMC. This is hardly independent.
When it comes to workplace pensions very few advisers are actively selling anything, there being no visible means of getting paid.
I think it would be fair to say, that Standard Life’s move is not prompted by a lack of confidence in advice but in advisors, who are not recommending their products.
Returning to a world where insurers controlled their own distribution is something that has been predicted for some time. The purchasing of networks such as Positive Solutions and Sesame Bankhall was a tentative step in that direction but we are now back to the very position we were in when I joined the industry in 1984.
Back then I could work for Hambro Life but have agencies with a number of life companies. I got Hambro (then Allied Dunbar’s) support so long as 60% or more of my work was channelled through its agency.
This didn’t seem to work too badly , but by 1987 I had been polarised and became an agent of Allied Dunbar promising them 100% of my business. Two years later I left to become an IFA where I promised to be unbiased in where I put my work.
Putting aside the ironies of this great rotation, we are left with the simple truth that most people buy financial services because they are influenced by advisers. Most advisers see themselves as selling the products of one manufacturer or another and the concept of independence is at best dimly understood,
One adviser in the article comments that he is unlikely to recommend Standard Life as it will be in competition. This is a good example of the muddied thinking about independence.
All consumers are aware of commission bias, very few know how to get rid of it. The only way that we can get truly independent advice is by ridding the advisory process of the conflicts imposed by the payment of advisers by manufacturers. But that would require a change in the way people buy, which is a lot harder to achieve than the way people sell.
In all this, the truly independent adviser must be the beneficiary. Provided he or she can move above the melee of recriminations and advise through channels where there is certainty of getting paid, the clear air of independence looks more valuable than ever.