IFAs question solicitors’ due diligence for restricted referrals

Most of the solicitors that I deal with think that it's pretty easy due diligence: small IFAs,who(they feel) are unlikely to survive as such,for long,post-RDR;thus leaving the only client protection and redress to FSCS(£55k maximum) or the £2bn capitalised FTSE firm who we love to hate.

they need us more than we need them. Upward and onwards

So let me ask the following question... What makes the financial adviser community qualified to make referals to solicitors, accountants or tax specialists? Do you have specialist knowledge? What due diligidence process have you gone through to make that suggestion to the client?

This is so typical of this area of the industry. All you see is a danger of losing a source of income, and you get up in arms. I've not heard one reason why a solicitor shouldn't be able to recommend to who ever they want.

If they happen to refer to a restricted adviser, the adviser then has the responsibility to tell the client of they can or can't advise on a particular thing. Same responsibility if a person walks in off of the street. This is just another professional connection you have to manage, and make sure the solicitor knows you are the best to go to.

I am sure the solicitors are bright enough to recognise that that referring to a restricted advisers requires extra work, and referring to a whole of market advisers doesn't. From the handful of lawyers I know, I think that point alone will ensure that the referrals to IFAs won't stop anytime soon.

If we want to be the first choice of solicitors, then we need to make sure that they see us as the only credible choice. It's all about relationships and trust. I have the freedom to choose who I refer clients to for other services which I do not provide. As long as the client is aware of why they are being referred to a particular third party and the referrer is confident the client will get the expected service, I can't see what the issue is.

@Ric Green - Couldn't agree with you more!

@Charles Rickard - Perfect response.

The 'law of unintended consequences' may actually make solicitors think twice because those that care most about their clients and their own reputations will always do the right thing.

@Ric & Charles - agreed.

We don't pay or receive introducer fees to accountants or soliciors and reccomend a varioety of both based on our knowledge of who we think likely to best suit a clients needs and that is it. We invariably mention more than one of each, highlighting what we think they are good for and suggest they speak to more than one.

The same tends to work in the reverse too with accountants we know often suggesting looking at us and one or two otehr firms so it is the client who decides who is the best fit.

Were I a solicitor/accountant I'd probably suggest an adviser spoke to more than one adviser to see who is the best fit and that could be 3 IFAs, 3 restricted advisers or a mixture and then leave ti to the adviser to explain any restrictions.

I'd have preferred if the SRA had stuck with Independant only, but this is the result of the FSA muddying the waters of the English language where the opposite of restricted should be un-restricted and NOT Indpendant. Independant is more of a mindset than anything.

@ DS. Absolutely! I am an independent and should a Solucitor wish to refer a new matter to myself or a restricted should be a choice of the client based on the recommendation of the introductory source! There have been a few unscrupulous solicitors and restricted advisers fee splitting, but this is not how most professionals work together!!!

Phil and LJ.

Couldn't agree more.