• Does the charging structure indicate a bias towards the restricted option?
On the other hand, you may be happy to work as a restricted adviser. Again, due diligence is required to ensure that your business model, and that of the network, are compatible.
#2: Who owns the clients?
There should be no debate, the ownership of clients, to the extent that such a thing exists, sits with your business.
Ask for a copy of the Appointed Representative agreement early in the due diligence process and check for any clauses which would prevent you from advising your clients if you leave the network. As an aside, if a network is reluctant to let you see the Appointed Representative agreement this should set alarm bells ringing.
#3: Has the network had regulatory problems?
This is very simple, why join a network which has had recent regulatory difficulties? Check for fines, past business reviews and other sanctions. If what you find concerns you, simply look elsewhere.
#4: Is the network profitable?
Profitability brings stability, minimal fee increases and reinvestment back into the services being provided to you. Ask for a copy of the accounts, confirm profitability and look for sources of income which may come under regulatory pressure in the future, potentially leading to fee increases, and also commercial arrangements affecting the options you can offer to your clients.
#5: Who owns the network?
The owners of the network, along with the board, will set the strategy for the business. Advisers want stability so key questions should include:
• Will any corporate owners restrict the advice being given by members now or in the future?
• Do the owners have the ability and the desire to continue investing in the network?
• Are the owners committed to the network in the long term?
#6: What are the network’s fees?
This is relatively low on my list of priorities because I believe other factors are more important.Ultimately though, you will want to know what the network charges for membership and the services you will receive in return. Only you can decide whether or not the proposition offers value for money. You should look carefully for hidden costs, beware of flat percentages, which can be less than transparent and ask for information about historical fee increases.
#7: How is the Professional Indemnity insurance arranged?
PI is always a trade-off between premium and quality of cover. The way in which it is arranged is also important, for example, does each member firm have their own policy or is the arrangement a single block policy for all members, which anyone who remembers the downfall of Honister knows, can be dangerous.
In many ways the PI terms offered can also be used as a barometer for the health of the network. High premiums, significant excesses and onerous exclusions should set alarm bells ringing.
