But is this a good thing? The amount of consolidation and the array of acquirers have reshaped what “independent” means in financial planning. The question some ask is whether the FCA is doing enough to protect the very concept of independence that sits at the heart of consumer trust.
An Independent Financial Adviser must consider all retail investment products from the entire market. They’re supposed to be free from conflicts, unshackled from product provider incentives, working purely in the client’s interest. It’s a noble ideal.
But does it survive when small IFA practices are absorbed into large consolidator groups?
Advice consolidators are building scale. But some argue that sometimes this is at the cost of the client. Others ask whether firms that own advice companies be allowed to own an investment arm? Does this create a conflict of interest?
Now, the FCA would argue they’ve got this covered. Regulatory permissions remain. Supervision continues. Firms must still demonstrate independence in their investment selection processes. But a fair question is whether ‘box-ticking’ compliance is enough when the entire commercial infrastructure surrounding advice has fundamentally changed.
Consider what independence meant fifteen years ago: a small firm, perhaps two or three advisers, deeply embedded in their community, their reputation their most valuable asset.
Now compare that with a consolidator managing two hundred advisers across multiple brands. The incentive structures are different. The accountability is different. The relationship between adviser and client, mediated through corporate structures and centralised investment propositions, is fundamentally different.
The consolidators, naturally, push back. They argue they bring benefits: better technology, more robust compliance, access to institutional pricing, career progression for advisers. These aren’t trivial advantages. Small firms struggled with regulatory burden; many sold precisely because they couldn’t sustain the cost of compliance. Consolidation has, in some ways, professionalised the industry.
But professionalisation and independence aren’t synonymous. In fact, they may increasingly be in tension. As firms become larger and more sophisticated, they may develop preferred panel arrangements, centralised research functions, and house views on asset allocation. All perfectly legitimate. But each step moves further from the founding principle: one adviser, one client, whole of market.
What should the FCA do? At a minimum, greater transparency. If you’re seeing an adviser whose firm is owned by a consolidator, you should know it. The ownership structure, the commercial pressures, the extent to which investment selection is genuinely independent or guided by central direction – all of this should be front and centre in client communications.
More radically, perhaps it’s time to revisit what “independent” means in an era of consolidation. Should there be limits on the size of firms claiming independence? Should there be stricter separation between advice and centralised investment management?
The stakes are high. Independence isn’t just regulatory semantics – it’s the foundation of consumer trust in financial advice. If that trust erodes because independence becomes a convenient label rather than a lived reality, the damage could extend far beyond individual firms. The FCA has the tools. The question is whether they have the will.
Robbie Lawther is Account Director at Quill PR.
Currently the news is awash with untruthful exploits where misinformation, exaggeration, downright lies and cover-ups have been exposed. While the truth might have been painful or embarrassing originally, the fallout from exposed lies is always 100 times worse.
Image courtesy of Pexels
The Observer’s recent outing of the alleged untruths in the book ‘The Salt Path’ was staggering to read, and made headlines across multiple media outlets, thanks in part to the premiere of the film based on the book. The protagonists, who had built a sympathetic and loyal following of readers due to their resilience in the face of adversity, were alleged to not only be untruthful, but in the author’s case potentially criminal.
Another key story last week was the publication of the report into the Horizon Post Office scandal, which outlined some of the awful impacts the scandal had had on those involved, including the suicide of at least 13 people. This intensely sad part of this story is just the tip of an iceberg of tragedy which has affected so many, and still lingers on, with hesitation and obfuscation surrounding payouts to victims.
Again, this story started with something going wrong (at a corporate level this time), but instead of facing the embarrassment of a mistake, taking the financial hit and taking responsibility, it was decided to not only lie about the nature of the problems, but also to lay the blame at the feet of innocent people. As the report pointed out, the bosses at the Post Office “maintained the fiction that its data was always accurate.”
The price of what would have been a costly mistake several years ago is now exponentially higher, but moreover, lives have been ruined and lost.
When lies are told, or covered up, the repercussions can be terrible, financially and on people’s lives. And deservedly, reputations can be completely destroyed.
Recent exposure by the Press Gazette into fake commentators and fake case studies underlines the importance of integrity and trust in the PR and media industry too.
Reputations are hard-won and easily lost, and when all is said and done an organisation’s or an individual’s reputation is one of its key assets, with the potential to make or break. Integrity is critical.
Emma Murphy is a Director at Quill PR.