NEBA Financial Solutions have worked with IFAs all over the world for many years in a number of different ways. Unsurprisingly, many many of them started at deVere. For all that might be said about deVere, we at NEBA have a lot of respect for deVere and what they have accomplished even though they are not our client. Regardless of how anyone personally feels about deVere, nobody can deny the success they have had. The vast majority of IFAs we interact who are most successful started at this company. It has proven time and time again to be a great training ground for success.
However, when IFAs leave to set up on their own or join another firm for better commission (as there is a lot better on offer out there), many simple mistakes are made by more than a few IFAs.
So why write this?
No, we are not trying to convince you to go back, although many IFAs do return to deVere. There is so much more money to be made. The reason is simple: DON’T MAKE STUPID CHOICES!! When you leave quite often there is nobody restricting your investment decisions and a world of options is opened up to you. It’s about putting your clients first.
Here are some tips to help you keep your clients happy and avoid death threats:
- Choose the right company to work with
Higher commission rates should not be the only thing that attracts you to a company. Did you know that most IFAs who leave deVere end up earning less money than they did before? Having higher commission rates without the right work ethic is a recipe for disaster. Keep up the good habits you have formed. The company you work with should also be regulated somewhere. If not, the amount and type of business you can do would be restricted e.g. SIPPs etc…. NEBA work with IFA companies all over the world and can advise you what is a good deal and who is trustworthy in your area to work with.
For those branching out on their own (starting their own company) choosing the right Network is essential. Networks basically provide TOB with all the Platforms you need for a small cut of the reveune. Often TOBs can’t be obtained without regulation or a history of business making it difficult for new companies starting up.
For a list of Networks we recommend, email email@example.com.
There are pros and cons to each. A Network is only suitable for those who can operate their own office as you are essentially on your own, just tapping into someone else’s TOB with Platforms. Some have joining applications of $2500+, a monthly charge + up to 20% of commission. Others just take 15-20% of commission. This can be a highly rewarding move for the more experienced IFA, but damaging if you are not quite ready to branch out on your own.
2. Structured Products
Ex-deVere IFAs seem to ask for the same type of structured Notes. Does S&P 500, FTSE 100 & Eurostoxx sound familiar? These are often described as the “Major Indexes”. Did you know that this combination of Indexes in a Structured Note lowers the return for the client and doesn’t lower volatility to make it safer?
There are many other “Safe” Indexes to use which will produce just as much (if not more) safety and a higher return. “Can’t be” I hear you say! Well, unless you are a Structured Note specialist and know how they are priced, you should listen up! It has more to do with the correlation between the underlying assets than the assets themselves. How Structured Notes are priced is a whole separate article, so I will leave it here. NEBA are happy to support you by giving rationale behind any Index used to help you explain to your clients.
Just because it is what you sold in the past, it doesn’t mean that it is still best today!
2. Other Bad Investment Choices
There are literally hundreds of companies out there. They also have sales men and women telling IFAs stories about “their investments” and “how good they are”. They make everything sound so wonderful to build your confidence in what their selling. I am surprised how many IFAs fall for these tricks. As a sales person yourself, shouldn’t you be able to recognise when you are being sold to?
Look into any investment you promote to your clients. If it sounds too good to be true, it often is regardless of the justification given to why it is not too good to be true. Sad to say that some IFAs simply don’t care about the risks choosing to ignore tham and are attracted to the ridiculously high commission on offer. Hopefully if you are reading this, you are not one of them.
Here are some thoughts and examples of investments to avoid:
Car Park or other property investments – Guaranteed return + Guaranteed buy back after 5 years. The T&C’s state that the guaranteed buy back is conditional on them having a buyer. WHAT??? That is like me saying I guarantee to sell your car in a week……. “as long as I have a buyer”. NEBA advised people to avoid these years ago. https://www.thisismoney.co.uk/money/investing/article-7217241/Park-sold-airport-car-park-spaces-investment-goes-bust.html
Any Fund or Loan Note that pays stupid commission to you, high return to the client, high commission to the distributor and the investment itself needs to make money. Mmmmm….. I am sure that all these people can be paid and the client will still get his money right?? Some Loan Notes are fine otherwise they wouldn’t exist. However, many that are promoted to IFAs have a great sounding story e.g. High Guaranteed return, 100% Capital Protected, high commission. Not so useful when the Capital Protection is worthless! https://beatthebanks.co.uk/unregulated-pensions-investments/dolphin-trust/
Might be worth reading https://nebablog.com/2018/08/13/100-capital-protection-myth-or-real/
These are just a few of the hundreds of examples ex-deVere IFAs have invested into.
In summary, leaving deVere can be the best move you have ever made, or making a few bad decisions could cost you severely (court action, jail, losing all your clients or worse). Avoid things that seem a little too good. After all, why would we even make 4-5% return pa investments if all these 10-20% Capital Protected Investments worked?? We wouldn’t, so there is something you must be missing.
Stay safe, keep your clients happy as these long term relationships are what make successful long term IFAs.
If you would like to know more about this subject, get in touch.
Visit www.nebafinancialsolutions.com to see our Structured Products and UCITS Funds http://www.nebafinancialsolutions.com/Risk-Rated-Portfolio-DFM, http://www.nebafinancialsolutions.com/real-asset-fund