Aligned advisers with ‘buyer of last resort’ (BOLR) arrangements may soon find themselves stuck as digital disruption proves to be too challenging for institutions, warns Joel Taylor, managing director of Fortnum Financial Advisers.
Mr Taylor said he expects an “unprecedented” number of advisers to flow out of institutions over the next few years as changing consumer demands force the industry to be client-focused, not product-focused.
“It’s a material shift which will prove too difficult for the big product manufacturers. Their complex, unwieldy, inefficient and intermediated business models are at the highest risk of digital disruption,” he said.
However, those aligned advisers with BOLR arrangements will find themselves “tied to institutional licensees and married to outdated, ineffective advice processes”, he said.
“BOLR may provide principals with a guaranteed buyer for their business waiting in the wings, but there are many trade-offs, including heavily restricted APLs,” he said.
“However, aligned advisers who don’t have BOLR agreements will increasingly leave the institutions to either join an independently-owned licensee or apply for their own licence in order to gain access to a professional advice framework that not only recognises the value of their professional judgement, but drives higher client and adviser satisfaction, more referrals and sustainable growth.”
Mr Taylor added that there are already signs this movement has begun.
“Already there are signs of growing dissatisfaction and agitation within aligned networks, as the industry moves more rapidly towards professionalism," he said.
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