latest Content

How to get on law firms’ referral panels – Part 1  

Neil Bailey, director of Fortitude Financial Planning, has been working with local law firms since 2008. Speaking at the recent IFP Practice Management event, he described how the firm became accepted on solicitors’ third party referral panels. Rob Kingsbury reports

Neil Bailey, director of Midlands-based Fortitude Financial Planning, spoke from experience and with candour at the recent IFP Practice Management conference about the firm’s journey in building relationships with local law firms and the value being derived from being on solicitors’ panels.

He admits the firm’s campaign to target law firms for referrals got off to a slow start and it only began to grow in any substantial way around the time of the Retail Distribution Review.

Opportunities opened up around this time for Fortitude when the team began to go into legal firms and present on the changes for advisers and for lawyers brought about by the RDR.

Key to this is the fact that post December 2012 lawyers have been in uncertain territory when it comes to referring clients to financial advice firms. This is due to conflicting guidance they are receiving from the legal industry’s professional bodies.

Pre RDR, guidance from the Solicitors Regulation Authority was that legal firms could only refer to independent financial advisers. Post RDR, new guidance was issued under principles-based regulation, which set no black and white rules. This opened the door for restricted advisers but left law firms not knowing whether they were safe to refer to them or not. The Law Society on the other hand urged lawyers to exercise their right to discretion and only refer and recommend to independent financial advisers, in order to reduce the potential risk of claims.

Bailey and the Fortitude team used these changes to go into legal firms and present on the implications and why lawyers should refer to independent financial advisers. “If I was a lawyer faced with this conflicting guidance I’d take the path of least resistance and only refer to independent financial advisers,” Bailey said.

Procedures and professionalism

Practice standards say that law firms must conduct proper due diligence on the third party companies to which they refer clients, and have procedures for doing so. In addition, they have to give the client sufficient information to make an informed choice on which adviser they want to use. This has led to law firms putting together panels of firms on which they have conducted due diligence and have a compliant audit trail that proves it.

To get the business from law firms now, not only will IFA firms have to go through the due diligence process but if they want to retain the business then they must deliver consistent service and be professional, Bailey says.

“Generating referrals from lawyers is a practice management issue for IFA firms. They need to ensure their processes are efficient, i.e. the firm is doing the right things; they are effective i.e. they are doing those things well; the processes and procedures are documented and adhered to and the firm can evidence they are adhered to; and the processes and procedures are regularly reviewed and improved in the light of any new guidance issued by the FCA,” Bailey said.

“As well as the law firms understanding what you do, they also need to understand what you don’t do, so they don’t waste their time, their client’s time and your time referring a piece of business for which you cannot deliver the outcomes to the standard and timescales that professionalism demands.”

But just by having the policy documents, processes and procedures in place, a firm can differentiate itself from many lawyers’ previous experiences “which is basically an adviser turning up and touting for business,” Bailey added.


Key to being placed on law firms’ panels is to choose the target market carefully and to specialise, Bailey advised. “Most lawyers are specialist – family, litigation, private client etc. If you go in and say ‘we can do everything’, they are going to look on you with a degree of scepticism because lawyers know they have to specialise and they will question how you can do everything.”

This is not as restricting as it may first appear, he added: “You can have more than one specialism within your firm; so one of you might deal with family law, another with wills and trusts, another with private client matters. In this way you can have a team approach to a particular firm’s requirements and they will understand that because it is exactly the way that law firms work.”

Fortitude has been gaining traction with lawyers and is now a preferred provider for referrals on three law firms’ panels. But getting to this point has been a hard slog, he adds. The firm has been targeting law firms since 2008, when it generated no referral fees at all, to 2014, when it has £12m funds under management and £90,000 recurring revenue as a result. The figures have been growing year by year. “The revenue to date has been from referrals from just one firm. We are now on the panels of two other firms and we expect the business to grow accordingly,” Bailey said.

Log on to tomorrow for Part 2, where we outline Neil’s top tips for working successfully with law firms, building relationships and what to be aware of when looking for referral business.

Visit Fortitude Financial Planning website




More Articles Like This