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Transition to RDR: Benefit to being vertically integrated

Chartered IFA firm Attivo Financial Planning tells FTAdviser that in the post-Retail Distribution World it will benefit from being part of a “vertically integrated” group, with its proposition augmented by an economical restricted offering using products from the wider business.

Attivo Financial Planning, which is completely RDR-ready, is part of Attivo Group. The chartered IFA firm comprises of three paraplanners and four IFAs, but Attivo Group also has a discretionary fund management unit as well as a self-invested personal pension and small self-administered scheme business.

According to Stephen Harper, managing director of Attivo Financial Planning, the other businesses within the group allow the firm to offer clients an effective restricted proposition to compliment its independent advice service, which will enable it to thrive in the new world.

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“They are separate companies but they are within the group, so we felt that actually it makes it a lot easier for us to present that under a restricted heading.”

Best of both

Mr Harper believes that most other advisory firms have chosen to offer either an independent or restricted proposition, but given the blurring of the lines between the two definitions under the new rules his firm decided it was important to offer both.

“Our client agreements give clients the option due to the type of client we deal with; for wealthier people, you need to be independent.

“A lot of referrals come from accountants and solicitors and a lot of our business comes through enquiries from the internet because we are, for example, the only chartered IFA in Cheltenham. If you are not independent they are not going to make that inquiry because the consumer does not understand the difference between the two.”

When Attivo first meets clients, the adviser will explain how both propositions work and “they could end up going either way”.

“The irony is they will pretty much get the same advice as we are fee-based on both and there really isn’t that much of a difference between the two.”

Mr Harper tells one story of a new client that recently came to visit him whose previous adviser had gone to St James’s Place two years ago and who did not realise the firm was not independent.

“He didn’t realise that actually his so-called IFA is no longer an IFA. He didn’t understand and that is not because anybody had tried to mislead anybody, it’s just that it hadn’t been made completely clear that actually he wasn’t getting independent advice.

“So we are both and the reason we are both is of course we want to be independent... but with our own Sipp and Ssas products and our own DFM, you could argue that we are a vertically integrated business and it works for us to be restricted in certain cases.”