advisory services
The IFA is someone who wants to be
on your side of the desk and working
with you as a small business which
understands your position. IFAs want
you to keep on using them because
they have given you good advice.
principal relationship with a client. It would
follow that an accountant who was advising a
They are your agent so have to
business on financial reconstruction, for ex-
ample, could be involved in a subsequent fund-
pursue your interests.
raising from external investors as this was not
the primary activity. The practice could not
start selling life insurance or a pension
scheme.
“An IFA firm also has the option to employ
its own chartered accountants and other spe-
cialist skills, which are provided under its FSA
registration. The diversity of disciplines which
can be assembled makes an IFA practice a
valuable source of mentoring and business
advice.”
Keeping IFAs up to speed
AIFA represents firms of Independent Finan-
cial Advisers rather than the individuals who
hold FSA registration. It sees one of its key
roles as being to keep the IFA profession fully
up to speed on trends and developments in
the investment sphere which enable member
firms – and hence individual IFAs - to deliver
recommendations which most accurately re-
flect the financial environment.
The Association’s membership ranges from
adverse implications for the businesses in- the small practice with a single registered IFA
volved if inexpert advice is given. Is it reason- and a few support staff, through to the large,
able to expect IFA firms to have the required broadly-based entities which Mr Cummings
depth of knowledge? has already described. “Our largest member
According to Chris Cummings, the aca- has around a thousand IFAs plus administra-
demic and professional standards of those tive and office staff.”
joining the sector has been increasing stead- The fact that there are many much smaller
ily over the years. “The typical background of firms operating around the UK does not imply
those moving to the corporate advice side is that the advice given is any less competent or
through a graduate training programme, from impartial from those sources. As the AIFA
a law firm, chartered accountancy or a simi- Director General observed, quite a few of these
lar career background. The experience they operations have formed networks or partner-
bring with them creates greater opportunity.” ships. “This helps them benefit from improved
There is a trend amongst the larger account- service standards, shared technology and the
ancy practices to establish ‘independent’ firms cost of compliance.”
of IFAs under their umbrella. The main rea- Certainly so far as the financial product
son for this is that Chartered Accountants are range available is concerned, the IFA - of what-
only permitted by their membership of the In- ever size – stands a far greater chance of meet-
stitute of Chartered Accountants to conduct ing your requirements than a tied adviser. Is it
investment business if it is ancillary to their just a question of the number of products
46
The Informed Executive
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