Going directly authorised: what Graham Foster learned the hard way
Episode 105: The Real Adviser Podcast
Going directly authorised is one of the most searched topics amongst advisers thinking about independence. It is also one of the most misunderstood.
We have spoken about it on the podcast before, in passing, in the context of other conversations. This episode we gave it the full treatment, with a guest who has actually done it: Graham Foster, founder of Sky Blue Wealth Management, and one of the good guys in this profession.
Graham has been in financial services since 1994. He started at Skandia, moved through IFA world, built and managed teams at larger firms for years, and eight years ago decided he had had enough of managing people and wanted to get back to what he actually cared about: doing proper financial planning for clients. He became an appointed representative under a colleague's firm first, then went directly authorised two years ago.
Here is what stood out.
It takes longer than you think
Graham and his compliance support estimated the DA process would take around four months. It took eighteen. That is the reality of the current FCA process for a solo adviser, even one with decades of clean experience behind him. If you are planning this move, build in time you do not think you need.
Use a compliance consultant
Graham used SimplyBiz throughout the process, at around £150 a month. His figure: go it alone and your approval rate sits at roughly 35%. With a compliance consultant in your corner, that rises to over 75%. The investment pays for itself. Do not attempt this without support.
The business plan is a live document
The FCA will return to your business plan after you are authorised. They cross-reference it against your regulatory data returns, which are submitted every six months. If your projected income figures are falling short of your actual numbers, they will notice. Graham was clear: the business plan needs to be detailed and mapped out over five years. Turnover, net profit, capital adequacy, liquid assets. All of it.
One specific point worth flagging: directors' loans. Graham set up directors' loans in the early days of the business to cover setup costs, which is standard accountancy advice. The problem is that directors' loans sitting against net profit can make your capital adequacy position look flat to the FCA. Get your accountant and your compliance consultant talking to each other before you start.
What the FCA actually cares about
This is the part that surprises most advisers, especially those who have been delivering excellent financial planning for years.
The FCA is assessing whether you are a competent compliance officer. Specifically, whether you can fulfil the responsibilities of SMF16 (compliance oversight) and SMF17 (money laundering reporting officer) as a solo regulated firm.
Alan's framing of this was: the same regulatory standards that apply to the compliance function at Barclays Bank apply to a one-person directly authorised firm. The rules do not scale down because your firm does.
This means your Consumer Duty documentation needs to be in order. Your vulnerable client process needs to be documented. Your investment philosophy needs to be written down and defensible. If you outsource investment management, you need a process for monitoring those managers. The FCA will ask about all of it.
Graham also recommended registering with the Consumer Duty Alliance, which is free. The FCA's Early and High Growth Department will engage with new DA firms, and having that framework in place before your interviews makes the conversation considerably easier.
The AR route as a stepping stone
One angle that came out of the conversation that deserves more attention: using an appointed representative arrangement as a deliberate stepping stone to DA.
Graham spent time as an AR under a trusted colleague's firm before going directly authorised. That period gave him the chance to build his client base, test his business model, and develop his processes under regulatory cover, without the full weight of direct authorisation from day one.
This is distinct from joining a network. An AR arrangement with someone you know and trust, where the terms are clear and the exit route is defined from the start, can be a genuinely useful bridge. The key, as Graham pointed out, is to be explicit with the FCA about how client relationships will transfer when you do eventually go DA. They will assume your business starts at zero. You need to show them otherwise.
One phrase that said everything
When Carl discussed Graham's business plan, he highlighted Graham's example of bringing on twenty families a year. A revenue target did not feature. Assets under management did not feature. Twenty families. That framing tells you everything about where his head is. It is also, and this is worth noting, exactly the kind of language the FCA responds well to when assessing whether a new firm has thought seriously about who it serves and why.
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Going DA is a serious undertaking. Graham put the do-it-alone approval rate at 35%, and his own process stretched well beyond its original timeline.
If you are thinking about it, start with the business plan. Get your accounts in order. Find a compliance consultant before you fill in a single FCA form. And if you can, align your application start date with the beginning of your financial year. It makes the regulatory data returns considerably less painful.
We covered the full conversation with Graham in episode 105, along with the new Irish Savings and Investment Account, the Octopus inheritance tax scheme fallout, cybersecurity as a client-facing issue, and a few other things besides.
Listen to (or watch) episode 105 here:
Until next time.
The TRAP Team
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P.S. Graham mentioned he is happy to speak with advisers thinking about the DA route. He is generous with his time, but he is also busy. Come with specific questions.
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