Compliance is such an important part that DAs might well be better off bringing that support in and getting the best of both worlds.
Bob Hunt is chief executive of Paradigm Mortgage Services
If you take a keen interest in adviser forums and message boards, then you’re likely to know that one of the most popular subject headers is, ‘Thinking of going DA’.
It’s a perennial favourite and the good news for those current AR firms who are ‘thinking of going DA’ is that there are plenty of advisers and firms out there who have made this very decision and not looked back since.
That said, one can fully understand the nervousness and anxiety around making a decision to leave a network and turn the letters AR into DA.
It’s not a decision that I believe should ever be taken lightly; indeed the exit plans and process that many AR firms are required to work through in order to leave their network tend to mean that the move can’t be done overnight anyway. So, this is a decision that can take time to make and to come to fruition.
One of the immediate concerns that is often raised by potential DAs is a big one – namely how they cover off the compliance needs of their business which have previously been looked after under the umbrella of their principal partner.
Indeed, within that adviser message thread about going DA, the first question is often around the off-the-shelf, third-party compliance support providers available to them and how they might measure up in today’s market.
There will of course be other concerns – PI, lender/provider access, proc fee levels, marketing, lead generation, the list goes on – however making sure that the business written is fully compliant and the firm is following the myriad of regulatory rules will be key.
And that’s a point that should not be underestimated by any firm, regardless of whether they are AR moving to DA or DA already; it’s the fact that advisers now work in a heavily regulated environment, where the risks of breaking those rules are far greater, and where the censure if found to be negligent can be severe.
It’s perhaps no surprise therefore that firms who are used to the sheltering protection of a network umbrella, might well wish to prioritise how they will remain compliant should they move down a different authorisation route.
Being a distributor where our membership is exclusively DA, we know only too well the importance of quality compliance, especially as that old adage about advisers generally rings true – advisers do not make the best compliance people, but it’s such an important necessity that it can’t be overlooked, and neither should it.
This is predominantly why we’ve always offered a compliance package to our DA firms, alongside all other opportunities within our distributor proposition, because one without the other just wouldn’t work, even if firms may find alternative services or they may have the resource and personnel to be able to look after this in-house.
However, we’re acutely aware that many advisory practices tend to be at that point where a full-time compliance officer plus support staff is not required, desirable or economic, but the need for compliance oversight is just as acute.
Again, if you’re adviser are you really equipped to handle the compliance yourself – I would suggest not – and therefore having that compliance support in the background with access to helpdesks and manuals tailored to the permissions of the firm, plus with regular updates and information provided on the ever-changing nature of financial services regulation is crucial.
Indeed, having that from your chosen distributor alongside all other offerings can make the move, and ongoing requirements, much easier to handle.
But, as always, cost is going to be an issue.
As a firm you might not require an ‘all bells and whistles’ compliance service but neither are you going to feel confident getting by with a ‘scraping the barrel’ offering.
You need something that covers all your needs, and which you can add specific services to if/when they are required – it’s for this very reason that we are offering all firms who commit to Paradigm exclusively, a basic compliance package for free plus the opportunity to bring in the extra expertise and resource needed, when required.
Some firms are made for the AR life, and are completely comfortable with what they pay and what they get; however there will always be those who feel in some way constricted and will want to look after all their own needs.
The big issue is that doing so will often require significant levels of support – and those already at the firm may not be the right people or appropriately qualified to carry out those roles.
Compliance is such an important part that DAs might well be better off bringing that support in and getting the best of both worlds – total control and complete confidence that they are going about their business in the right way.
That sort of peace of mind would certainly help pave the way for those looking to move to DA status and we would recommend you secure it as soon as possible.
