Often, the adviser will be governed by the AR firm and their attitude will come from the leadership within that firm.
This distance makes the supervision of registered individuals even more difficult for networks. It may well be that the AR is of sufficient size to have some kind of layer of supervision within its own structure. Otherwise, the supervision will often fall to the owner of the AR, who themselves may be an adviser.
An adviser is unlikely to make sufficient time to genuinely supervise another adviser. The AR firm may be one of many that is under the network umbrella and therefore any supervision from the network is diluted between many firms. The network may be in touch with the firm, but unlikely to be in touch with the individual advisers.
It is this lack of supervision that creates the problems. Many advisers believe that they know much more than they actually do and due to their own time constraints do not have time to spend getting assistance on matters in which they lack experience or knowledge. Most networks have an abundance of help and information, either on intranet websites or with helplines, but the advisers do not use these enough.
Matters have improved in recent times. But not because of the actions of the networks. These have been brought about by the retail distribution review.
The first thing this has achieved has been to weed out advisers who failed to gain the new level of qualification needed to practice. I always feel puzzled about what those advisers were telling clients if they could not pass a set of fairly straightforward exams.
My experience is that better qualified advisers tend to give better quality advice. Mainly because they have a decent breadth of knowledge and are more aware of alternatives and downsides of particular courses of action.
Secondly, the RDR also required advisers to be transparent about their earnings. The upshot of this is that consumers were able to see clearly what advisers were earning in fees, and in turn may have prevented a bias among advisers towards higher earning products.
Most of the issues that are causing problems for networks are legacy issues and advisers should be behaving more ethically today.
| Key points |
Networks offer the ideal of allowing advisers to advise within an easy structured process RDR has weeded out many advisers who could not achieve the new level of qualification required to practice In the rush to increase their numbers, networks inadvertently took on advisers alongside the liabilities they had built up over time |
However, some of the old issues are still being unearthed by thematic reviews undertaken by the Financial Conduct Authority. The Pensions Review, which started in 2008 is still ongoing. All of the networks have been affected by this review as they all had similar problems. Having been involved with one network in this respect, I know first-hand that nearly all of the advice I’ve checked would at best have been considered to be unclear and quite a lot was simply unsuitable.
