The age-old question for brokers
AR or DA?
For as long as the profession of modern financial advice has existed, so has the question of whether to become a directly authorised (DA) broker or an appointed representative (AR).
Whichever route a broker chooses, they play a vital role in terms of guiding and advising clients on some of the biggest financial decisions of their lives, from buying a home to protecting themselves and their loved ones from challenging life events and difficult times
There is no one-size-fits-all approach. Instead, it’s all about finding the path that best suits a broker and their business. So, what are the key aspects to consider?
Making the right choice
For many, especially newer or smaller businesses, being under the regulatory umbrella of a larger network as an AR can offer peace of mind in terms of compliance. This can give brokers more time to focus on building their client base and providing top quality advice to customers.
On the other hand, being directly authorised by the FCA gives businesses greater autonomy when choosing how to run their business and tailoring the services they offer. Making this move requires a significant investment of time, but in turn grants full independence when implementing IT systems and compliance processes.
Lisa Martin
Development Director
TMA
Vikki Jefferies
Proposition Director
PRIMIS
Incoming regulation
Looking ahead to 2022, increased regulatory scrutiny is expected from the FCA in the form of a new Consumer Duty, a focus on data management and improved support for vulnerable customers. With this context in mind, deciding between AR or DA can be a more complex decision for brokers.
However, although being an AR can provide assurances about compliance, brokers still need to be aware of changing regulations and possible tighter scrutiny, while those looking to make the switch to DA should not be put off by the regulatory environment. There is much more to being a directly authorised broker than purely compliance, and while it’s critical to understand the implications of the move (including personal liability), it shouldn’t be a deterrent.
Always supported
No matter which path is chosen, finding the right network or mortgage club is essential. Each broker’s business is their own, and networks and clubs are there to empower advisers to reach their full potential and ensure compliance.
Networks support members with access to a wealth of products through their panels of lenders and providers. Often, these include exclusive products and those to suit even the most complex financial situations, making sure brokers can access the right deal for their client. But these benefits are no longer limited purely to ARs, as clubs now provide access to a range of products and exclusive deals that can help brokers provide the best service to their clients too.
A good network or club should also offer plenty of support and training through a range of channels including helplines and FAQ pages, alongside carefully curated training programmes and workshops to make sure intermediaries are informed on all issues.
Being part of a larger group comes with additional benefits. At PRIMIS and TMA, we offer the opportunity for crossover support under the overarching umbrella of the LSL Group, allowing brokers to harness the breadth of the group’s expertise across the industry and receive expert support on niche topics such as new builds, green mortgages, ESG propositions and more.
For an AR broker looking to become directly authorised, having access to mortgage club resources can provide an additional layer of support and help the broker to make an informed decision.
The importance of tech
Whether or not brokers choose DA or AR, they should also make sure they have the right technology platform in place for their business requirements. Research from TMA cited 64% of brokers have adopted a hybrid working model following the pandemic, highlighting the need to provide a seamless experience whether in or out of the office, as well as helping to manage case load and streamline processes.
These are important benefits for intermediaries, and AR brokers accessing these tools through their network can leverage their relationships to understand how these systems can meet their needs. Indeed, these benefits are not just restricted to appointed representatives. For directly authorised advisers, clubs and networks can also help by using their wealth of knowledge to recommend a well-suited system.
Directly authorised or appointed representative – it’s an age-old question that can be a tough decision, with clear benefits to both. Making the choice depends on what best suits a broker’s specific business, but whichever route you go down, leveraging the support of a network or mortgage club can play a central role in reaching your full potential.
