Instos ‘struggling’ with IFA ascendancy

The incumbent institutional platform providers are finding the rise of independent financial advisers challenging from a product development and distribution point of view, says Praemium.

Speaking to ifa, Praemium head of distribution Martin Morris said the major financial institutions are not keeping pace with trends in the post-FOFA environment and burgeoning IFA movement.

“I think the new environment is going to be difficult for them – they have been set up as businesses for the world of tied distribution,” Mr Morris said.

“I think they need to decide whether they are going to develop products truly suited to the IFA market or open up and allow other service providers to reach their networks. They are still transitioning and I think struggling with that decision.”


Despite lip service being paid to ‘open architecture’ and broad APLs at the institutions, many are still hesitant to open up their financial advice networks to third-party technology and investment product providers.

“We’re still not talking to the large AFSLs,” he explained. “They are still controlling their advisers, they are still badging their own PDSs, they are still badging their own models, so there hasn’t been a change in the way they interact.”

Mr Morris said it was still “virtually impossible” for advisers with some large institutionally-owned licensees to use a Praemium platform, for example, though said it was increasingly possible to strike a relationship with a large and influential practice within an institutional network and “push for an exception”.

The distribution strategist also criticised some of the so-called SMA offerings introduced by the institutional platform providers.

“The institutions may introduce ‘managed accounts’ as an opportunity, but they still control the process and it still sits on old technology,” he said.

The comments come as 75 per cent of respondents to an ifa straw poll indicated they believe the independent financial adviser market will outnumber the institutionally-aligned market in the future, with 50.3 per cent anticipating the shift to occur within two years.

Instos ‘struggling’ with IFA ascendancy
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