Letting a network work for you

I am always surprised when brokers say that they can manage without being in a network. Only when they feel they can no longer manage, would they consider signing up to one.

A network comprises a large number of relatively small firms, most of which are owner-managed businesses. It would be unusual for such firms to have much in the way of spare capacity in which to address anything other than the day-to-day running of the business. Tasks such as marketing the business, becoming and remaining compliant, getting to grips with the latest changes in employment legislation and negotiating agency terms with insurers inevitably fall on the shoulders of the principals who have to try fit them into their busy schedules.

Instead of carrying out the work themselves, brokers can let a network do it for them. And, because the network only has to do the work once and can cascade the results to all their member firms, it is a very cost-effective way of doing business.

For example, under Financial Services Authority rules, all brokers need a terms-of-business agreement with their customers. The document needs to address all the requirements of the FSA at the same time as ensuring that the broker's own needs are considered. It is very easy for a network to create a common set of such documents for its members to use. The work will invariably be carried out by someone who spends all their time on regulatory matters, supported by someone who understands the practicalities of being a both a broker and someone from IT.

Compare this to an individual broker who will first have to get to grips with what the regulation requires, then see how this fits into the way he prefers to run the business and, finally, draft the actual words needed.

Finally, after all this, he will have to work out how to get it onto his IT system.

Who do you think is likely to do the better job? Who will take longest?

So why do many brokers appear to want to struggle with this sort of task independently?

It seems that brokers consider it is admitting defeat as independents if they sign up to a network. The irony is, those who have already seen the sense cannot understand now why they resisted in the first place.