What does the Legal Services Act mean for advisers?

Martin Ruskin, Brian Page and Kirsten Dalton (pictured) explain how the Legal Services Act is likely to effect their businesses.

Kirsten Dalton, managing director, Professional Financial Centre (Thames Valley)

The Legal Services Act will lead to a move to quality and the smaller legal firms will find it difficult to carry on in the same way, just like financial advisers with the retail distribution review.

We can see lots of different options for solicitors and financial planners post-October 2011 [when the Legal Services Act is implemented].

I think there is a lack of appreciation among solicitors of the impact of the Act on their businesses. One of the weaknesses of the small firms is that they do not have a very commercial outlook or a business oriented-hierarchy. Perhaps they are over confident in their relationship with clients but many solicitors have a large number of clients who don’t have any loyalty to the firm.

What financial planners can bring to the table

When solicitors work with clients they don’t tend to go beyond the matter at hand and that is where professional financial planners can really help. We see clients regularly and we can identify issues that the solicitor is unaware of which need their legal input. It is very much a three-way relationship between the client, financial adviser and the solicitor.

A recurring income is particularly attractive for partners and law firms because their business can be very transactional.

One of our plans going forward is to offer them a B-share class [in Professional Financial Centre] so they can recover some revenue from referrals.

The Solicitor Regulatory Authority is moving to principles-based regulation and this is another area where financial advisers can help solicitors. We have gone through all this and can help them demonstrate their equivalent of treating customers fairly.