I have been watching a rather brilliant BBC show called Saving Britain’s Pubs.
Hosted by chef and pub owner Tom Kerridge, it was filmed in the early part of this year, so takes an unexpected turn when the first national lockdown arrives.
But one of the most revealing features of it is the relationship between some landlords and the ultimate owners of their properties, the tied pubs.
These landlords are locked into paying rent to a big chain and agreeing to sell beer supplied from that chain and pay its wholesale prices.
One couple from the West Country, who have no shortage of customers, find themselves forced to hike their prices to ludicrous levels just to make ends meet (their profit for one year was just £3,000).
The upshot was that they ended up having to run their business in a way they did not want, because they were obliged to report to the pub company.
This reminded me of what I hear so often from people who have not enjoyed working for vertically integrated advice companies – the advisers are like landlords tied to a pub company.
In many respects, working for one of these businesses helps a great deal.
You get the benefit of mass branding, you have IT, compliance and lots of investment tools and expertise at your disposal.
It can also mean feeling part of a bigger team, with a corporate structure built around you that provides support.
But with this comes a responsibility to behave in a certain manner that is set by someone who may not understand the type of business you want to run. And the support, when it does come, is often in a limited way – typically focussed on revenue generation.
In some cases this means being forced to sell products you may not necessarily think are the best; being asked to hit sales targets and profitability levels that you may not approve of; and being constantly under pressure to change your business methods if they do not seem to be working.
Most recently I heard from one adviser who fell out with a company because he did not want to sell products to his friends and family, which he claimed was the modus operandi of all new recruits in this company.
Another adviser who had left a different company told me of the pressures to churn products all the time in order to justify advice fees.
I have always said that independent financial advice is the gold standard of the industry – and financial advisers I speak to regularly going it alone, or who are part of small businesses, are extraordinarily proud of what they achieve.
Their morality and philosophy is at the heart of the business, not those of a bigger company behind them.
