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When it’s time to change networks

This article is part of
Networks: a users’ guide

When it’s time to change networks

Moving network can be time consuming and disruptive. It should only be undertaken after extensive due diligence into the alternative options and the arrangements for leaving the current network.

There are any number of reasons why now might the right time to change network; in my experience the top three are:

1. Ever tightening restrictions over product or advice areas

2. Perceived poor value for money

3. Poor service

If you are considering parting company with your network, think about the following before you decide to leave. They should be covered in your contract, if not, then they become areas to negotiate on when you hand in your notice.

Notice period: Typically between one and three months; understanding your notice period is crucial to planning your move, especially if your re-authorisation will take longer than your notice period, leaving you unable to advise clients for a period of time.

Financial terms: Once in receipt of your notice, what action will your current network take? Will they withdraw your authorisation or stop paying your adviser fees?

Your contract should make the financial arrangements on leaving clear. If they do not, I recommend contacting advisers who have recently left to understand the process in more detail. The FCA register will show you which advisers have recently left a network as well as where they chose to move to.

Block client transfer: Although certain restrictions apply, the most efficient way to move clients from the existing to new network is a block transfer or novation. Not all networks allow this, check whether yours does.

Data: Will your current network allow you to take copies of the files? Will they allow access to your client data? How easy is this to migrate into a new back office system?

Investment proposition: An ever-increasing number of networks are imposing a restrictive investment proposition on their members; indeed, this is the reason many advisers choose to move on.

If you have used your network’s restricted proposition and you leave, will you still have access to the platform you have placed your clients on? Will you need to make significant changes to your investment proposition? How much work will be involved?

Restrictive clauses: Although rare, I have seen some networks impose restrictions on client contact or solicitation after leaving. Check your contract.

New network

Moving networks is not something advisers should undertake on a regular basis; careful due diligence is therefore vital. I would suggest asking the following 10 questions:

#1: Restricted or independent proposition? In my experience most advisers still believe independent advice produces better client outcomes, while giving them a competitive advantage over restricted advisers.

If the network purports to allow independent advice look for evidence to support this, and ask further questions:

• What percentage of the member firms are independent?

• If both restricted and independent options are available, which is growing more rapidly?