Wealth managers hoping to boost assets under management through partnerships with independent financial advisers (IFAs) are increasingly targeted by third party introducers, but how many are taking them up?
Walker Crips is one firm that has only recently begun establishing relationships with IFAs. Last year, the firm launched a range of model portfolios for intermediaries and opened up its bespoke service to advisers with an overhauled fee structure.
This marked its first foray into the IFA market, but despite receiving approaches from third party firms offering introductions, chief investment officer Mark Rushton (pictured) said he would only use internal resources to build relationships with IFAs.
‘My very strong belief is that I would much prefer to have someone like Paul [Jordan, head of business development], who is imbued with all the values of the firm, being the face of the firm to all our IFA contacts directly, rather than rely on a second-hand knowledge of the firm and a second-hand allegiance,’ he said.
Question of allegiance
The concept of allegiance is ‘hugely important’ to Rushton, who says it is questionable how much trust could be put into a third party introducer.
‘If they are exclusive, why not employ them? If they are not, they are at the very least working for someone else.’
He added there are ‘issues’ about how introducers are expected to be remunerated, with fees ranging up to 20% of the client’s advice charge.
However, Rushton pointed out IFA introducers could work well for a very mature business that had a long-established record of partnering IFAs. In Walker Crips’ case, since the business has never explicitly gone out to the IFA market, Rushton prefers to have control over the ‘face’ of the business.
‘It’s absolutely vital that the face and the front of the business is someone that we totally have faith in,’ he said.
Another head of a large wealth firm, who declined to be named, said that while he had received many approaches from IFA introducer firms, he believes the quality is poor.
‘The calibre is not good,’ he said. ‘We haven’t been impressed with the whole concept.’
Richard Leigh, managing director of London & Capital, disagreed that third party introducers would be useful to a more established firm and that new entrants to the market ‘would probably need something like that’.
‘We have been approached by one or two and our view is very straightforward. If you’re just starting out you will probably need something like that but London & Capital is 25 years established. We don’t need that.’
He puts his trust in platform business development teams alongside the firm’s internal team of 50. ‘We use platforms and they have salesmen running up and down the country. The pension houses also have salesmen running up and down the country. Those people introduce work to London & Capital.’
This point is echoed by James Hutson, managing director and head of investment management at Arjent, who says his 12-strong front office team is complemented by its presence on half a dozen wrap platforms.
‘Our product is widely available on a number of highly regarded platforms; that extends to networks as well,’ he said.
While many investment managers are using model portfolios accessible via platforms as a means to gain business from IFAs, Redmayne-Bentley has chosen not to launch models. Managing partner David Loudon believes this means the firm would be moving away from its core bespoke offer.
‘I don’t believe we are big enough really [to offer models] and its sort of either/or,’ he said. ‘If you go down the model route then clearly you are not giving a personalised solution.’
In keeping with the personalised approach Redmayne-Bentley has two business development managers on the road, and Loudon argues: ‘We do feel it is something that should be offered on a local basis rather than on a national basis.’