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).

No matter their authorisation, brokers play a vital role in 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. It’s about finding the path that best suits a broker and their business.

Peace of mind

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 and personal indemnity (PI) insurance.

Networks and clubs empower advisers to reach their potential

In addition to compliance support, some networks provide blanket PI cover for members and even subsidise the costs. This additional support can give brokers more time to focus on building their client base and providing top-quality advice.

On the other hand, being authorised by the Financial Conduct Authority gives businesses greater autonomy. While becoming DA requires a significant investment of time and a regulatory understanding, with brokers also liable for their own indemnity charges, it also grants full independence when choosing how to run their business and tailoring their services, including implementing IT systems and compliance processes.

Having the right technology platform is essential for success

Next year, 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. This can make deciding between AR or DA an even more intricate decision for brokers.

However, although being an AR can provide assurances about compliance, brokers need to be aware of changing regulations and possible tighter scrutiny, and those looking to switch to DA should not be put off by the regulatory environment. There is much more to being a DA broker than compliance so it shouldn’t be a deterrent.

Networks and clubs

No matter which path an adviser chooses, finding the right network or mortgage club is essential. Each broker’s business is their own, and networks and clubs empower advisers to reach their potential.

Being part of a larger group comes with extra benefits

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 to ARs.

A good network or club should offer plenty of support and training through a range of channels, from helplines to carefully curated programmes and workshops.

Being part of a larger group comes with extra benefits. At Primis and TMA, we offer crossover support under the umbrella of LSL Group, allowing brokers to harness the breadth of the group’s expertise and receive support on niche topics such as green mortgages.

A good network or club should offer plenty of support and training through a range of channels

For an AR broker looking to become DA, having access to mortgage club resources can provide an additional layer of support and help the broker to make an informed decision.

Importance of tech

Having the right technology platform is also essential for success. Research from TMA found 64% of brokers had 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 caseloads and streamline processes.

These are important benefits for intermediaries, and AR brokers should leverage their network relationships to understand how the provided system can meet their needs. Indeed, these benefits are not restricted to ARs. For DA advisers, clubs and networks can also help by using their wealth of knowledge to recommend a well-suited system.

No matter their authorisation, brokers play a vital role in guiding and advising clients

DA or AR — it can be a tough decision with clear benefits to both. Making the choice depends on what best suits a broker’s business but, whichever route you follow, leveraging the support of a network or mortgage club can play a central role in reaching your potential.

TMA development director Lisa Martin and Primis proposition director Vikki Jefferies