Friday Highlight  

Discretionary permissions could blur IFA's independence status

As not to blur any lines and to mitigate conflicts, financial planning was never envisioned in the business model.

Instead, there was a strong intent to develop relationships with like-minded IFAs where we could collaborate and find solutions for their clients together.

This intent seeks to use the discretionary permissions that O-IM secured for the benefit of the wider industry without the need for an IFA feeling it necessary to secure their own discretionary permissions and introduce a conflict they will struggle to manage.  


The UK benefits from one of the strongest regulatory regimes in the world and this ensures a high level of consumer protection.

The regulatory obligations for IFAs and DFMs are demanding from the moment a business seeks authorisation and then on an ongoing basis.

Due to this, IFAs who consider obtaining discretionary permissions need to determine if the revenue and operational benefits of securing those permissions can actually outweigh their regulatory obligations in respect of suitability, conflict management, treating clients fairly and working in the client’s best interest. 

Fees erode client returns in absolute terms so it is incumbent on all IFAs and DFMs to ensure they provide value to clients.

An IFA with a discretionary offering is unlikely to have the expertise to achieve benchmark-beating returns and are also unlikely to have the scale to offer their service at a highly competitive rate.

Although discretionary permissions may simplify an advisory clients experience and diversify an IFAs revenue stream, the benefits for the end client is limited when considering what is available to them already. 

Financial planning and investment management are services that many consumers benefit from to help secure their financial goals.

For the industry and the regulator, they both most ensure that client outcomes are the primary focus and conflict management is a key objective of achieving that goal.

IFAs with discretionary permissions is, in short, a conflict that clients do not need to be exposed to.

Lewis Hamm is co-founder and chief executive of O-IM