There are also differences in terms of what is required from a legal and taxation perspective.
Advisers in a national partnership have to meet the compliance and regulatory requirements set by the parent company but are typically self-employed. Therefore, they are responsible for their own taxation.
The main difference between a national partnership and a network from a compliance perspective is that partners are registered individuals, whereas advice businesses within a network are appointed representatives.
In the case of an appointed representative as part of a network, the business and its advisers will still be required to demonstrate that they can competently conduct regulated business in accordance with the Financial Conduct Authority standards.
However instead of holding the regulatory responsibility themselves, the network, which is the directly authorised company, has that responsibility and is the principal company that is accountable to the FCA for the actions of all the ARs registered within it.
Registered individuals, on the other hand, work for directly authorised national partnership companies, either as an employed or self-employed adviser.
Typically, the wider partnership will set compliance standards that the advice businesses must meet, but it is responsible for regulatory compliance in a different way to that of networks.
Acting under one brand as part of a national partnership model can also hold advantages when it comes to securing professional indemnity cover due to the uniformity of approach.
At some businesses, PI is arranged centrally and advisers benefit from the real value in one common national brand with common, controlled processes.
A culture of equality
Having a good culture is important in any advice business, not least because the regulator keeps a keen eye on it.
Some national partnership models allow advice businesses to create a culture where the client, advisers, back-office staff and business as a whole are of equal importance.
Experience tells us it can sometimes be difficult for a network to embed culture alignment in their companies as each business will have its own culture.
Overall, while there are many similarities between network and national partnership structures, there are some core differences that set them apart from one another.
When choosing which path to travel down for yourself and your advice business, we always recommend that you talk to a few advisers who joined either a national partnership or network. Do this before deciding which is right for you and you can establish the reality of the model and the business you are considering to join.
Darrell Stone is head of partnership development at national IFA partnership Continuum
