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View from the Top
04/03/2004
- Post Magazine
Andrew Holman, Chief Executive, Holman's
There was a time last year when a 'new' broker network seemed to spring up each week, claiming to be the panacea for all brokers' problems - providing not just FSA compliance, but also IT systems, accounting and (often, it seemed, as an afterthought) access to markets.
While, superficially, there are some immediate attractions to signing up
to one of these new offerings, it is worth looking at the strategic issues
that could develop later;
because once you're in, in practical terms it might be very hard to get out.
A big risk is that the new network you join does not attract the critical mass of support needed to allow it to survive. What happens then? The network will have cut back its services, or sell (to whom? what are its assets?), or merge with another network that you evidently didn't want to join in the first place. So if you're going to sign up, choosing the right one will be crucial.
Secondly, networks, old or new, aren't in business as charities; they are in business to make profits. And to do this they have their own strategies - which brokers need to be sure of before they join. Who are the backers and how long-term are their interests? How will the network develop after January 2005? If the horizons of the network and the broker are not fully aligned, then this is a sure recipe for problems later on.
Although we conceived the broker network back in the 1960s, we don't offer compliance help because our feedback tells us that nearly all well-run brokers will register themselves - and we agree with them that this should be fully within their capabilities, especially since the internal rules of these new networks are often simply a carbon copy of the FSA ones.
The FSA regime will have major implications for many retail brokers; but
has it been over-spun, like the 45-minute weapons of mass destruction claim?
Will some of these new networks be the last refuge of distressed brokers,
which the network is forced to accept in order to reach critical mass? And
how many new networks will fail? One thing is for sure - we will all know
soon enough.
