Financial plannning: Tied agents may be attractive but there's a catch

Talking to an independent adviser is often presented as the sole option for those of us with a range of financial needs. But in some cases, salespeople who are only able to advise on their company's products can be an acceptable alternative. Simon Read dons his cricket pads to tell us the score.

If Yorkshire County Cricket Club hadn't relaxed its eligibility rules, it's fairly unlikely that the team would have remained a force in county cricket. Until relatively recently, players had to be Yorkshire-born to play for the county. So while other teams picked from the best in the world, Yorkshire was limited to its own.

The practice was clearly nonsense. In much the same way, comparing a tied agent to an independent financial adviser (IFA) could be said to be nonsense. From one you'll be offered a choice of the best products across the market while the other will only be able to offer you products from his or her own company.

Yet many tied agents are very successful. Why? Partly because we're all lazy and partly because many tied agents are good at their job and offer decent advice.

The problem with tied agents lies not necessarily with the salesmen themselves, but with their limited product range. When it comes to looking at an individual's situation and recommending a course of action, both an IFA and a tied agent could end up with the same answer.

The difference is that an IFA will recommend the best pension, PEP, or whatever from across the whole market while a tied agent will be limited to offering his or her own company's product, whether it's any good or not.

"I think that, in all morality, somebody should not be allowed to sell to the public unless they can offer a range of good products," says IFA Alastair Conway, managing director of Clark Conway. "The idea that people feel they are getting good advice from a tied agent is wrong."

This view is typical of most IFAs. They are fiercely proud of their independent status and it is clearly galling for them to see so many people buy financial products through a tied agent. Worse is the danger that, by choosing a tied agent, people end up with the wrong products.

Yet this view is disputed by companies that use salespeople. Allied Dunbar runs one of the most successful networks of tied agents in the country. "Our agents offer good professional advice," says an Allied Dunbar spokesman. "We spend a great deal of time and money training them properly, above and beyond the standards set by the industry. Additionally, our agents have the ability to offer the best possible service, in terms of ease of access and client servicing. They deal with one system which they understand very well, and so can spend more time meeting clients' needs."

Large insurance companies also offer unique confidence and security, according to Allied Dunbar. "We offer a guarantee that if one of our advisers has offered the wrong product or wrong advice, we'll offer compensation and put the client back in the right position. IFAs may not have the backing to do that."

When it comes to products, most insurance companies offer much the same these days, claims Allied Dunbar. Therefore it doesn't matter so much which product you buy - what matters is the advice you get. This is a debatable point. If a tied agent cannot actually offer the best product for a particular customer, it is unlikely that he or she will admit that and tell a customer to go elsewhere.

In reality, the tied agent is more likely to make the foot fit the shoe, rather than the other way round.

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Life and Style
food + drink
PROMOTED VIDEO
News
i100
Arts and Entertainment
a clockwork orange, stanley kubrick
filmSony could have made a cult classic
Life and Style
fashionThe essential guide to all the designer Christmas sale dates
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
news... you won't believe how bad their skills were
News
people

Arts and Entertainment
Mark Wright and Mark Wright
tvStrictly goes head-to-head with Apprentice
Sport
footballPremier League preview: All the talking points ahead of this weekend's clashes
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas