Written by an experienced financial adviser for those considering the transition from employed to self-employed under an AR/Network.
Introduction
The financial advisory profession in the UK offers rewarding career paths, but one of the biggest decisions you’ll face is how to become established in this industry and control your own destiny. Do you: work for another firm as an employed adviser, set up your own business from scratch, or take on a hybrid role which provides you the opportunity to build your own business without being out in the cold completely.
This choice isn’t just about money, it’s about your long-term goals, your work-life balance, and how much control you want over your business and the direction you take it.
If you’re currently employed by an Appointed Representative (AR) or via a Network directly, and feel like you're treading water, adding value to what is essentially someone else's clients, then this article is for you. We’ll look at the key differences, break down the pros and cons, and take a deeper dive into what should be considered before any decision is made.
The Three Career Options for UK Financial Advisers
Employed Under an Appointed Representative or a Network
If you’re employed by a firm that is an Appointed Representative (AR) of a larger Network, your job is relatively structured.
Pros:
You will receive a salary, often with commission and bonuses.
Lead Source: The firm would usually (but not always) provide you with clients and/or leads.
Existing compliance regime for you to operate under.
Advising tools provided: You would be provided with the technology and programmes required to deliver compliant advice.
Cons:
The firm will have full control over what services and products you offer.
Set Working Hours: The hours you are expected to work are often determined by the firm employing you.
Minimum Targets: You would be required to meet minimum targets in order to validate your contract, prior to any production based bonuses/commissions being paid.
You need to write a lot more business: In a typical contract, you would normally have to generate two to three times as much business to bring in the same level of income as you would in the other models below.
2. Running Your Own Firm
For those who are seeking full independence, setting up a Directly Authorised (DA) firm is an option, or you can trade as an AR Firm under a Network.
Pros:
You have full control: You will have complete control over your business and earnings.
If you are an AR firm the compliance process will already be in place, your responsibility will be the general oversight of this and ensuring all personnel are up to speed.
Your margins will be higher as you will be controlling your prices and expenses with no 'middle man'.
Cons:
You will be responsible for all aspects of the business.
If you are a DA firm you will need to set up your own compliance manual and be responsible for its deliverance. To a degree these can be outsourced to the likes of Tenet and Simply Biz, but you are still fully responsible for any failures in adherence.
You'll need Professional Indemnity Insurance, without it you cannot trade.
If you are an AR, you will have to pay Network Fees, typically these in the form of a retention on your income, (essentially a share of your turnover going to your Network (typically between 10% and 20%) plus a monthly fee to cover PI costs etc.
A premises to operate from, is required to run a business, so you'll need to consider any applicable rent and Business Rates. Unless your planning on working from home.
You will be responsible for Branding, Websites, Social Media, Marketing, and ensuring all of it remains up-to-date and compliant.
Dealing with employment law: You must ensure you are up-to-date with employment law, including any rights or obligations to employed staff (PAYE system, Workplace Pensions scheme, etc.).
If DA you will need to complete regular returns to the FCA (completed for you as an AR.)
If DA you will be responsible for complaint handling.
If AR you'll be Liable if a complaint is upheld but you'll not have to handle the complaint.
Bookkeeping and accounting responsibility, and any Companies House returns.
3. Hybrid Model: Self-Employed Adviser Under an AR/Network (How we work)
This is the middle ground between employment and fully running your own business. This is the option Keystone utilise.
Pros:
You will operate under an AR/Network’s regulatory umbrella.
You may receive company clients to work with or leads. These would (usually) belong to the company throughout, but will enable you to generate income as you build your own clients.
Develop your own client bank: You would (ordinarily) be able to develop your own client bank, which will (usually) remain yours should you ever part company with the AR/Network concerned. This was not always the case, but is nowadays becoming the accepted norm.
You have higher earnings potential as you will pay a lower share of the income you generate to the AR or/and Network, to cover their overheads (office space, admin support, business marketing, office systems, professional Indemnity costs). The economy of scale would ordinarily make it less costly than providing these things yourself.
Freedom for growth: Whilst you are required to follow the AR/Network's compliance guidelines, you will have greater control over the way you run your business and the hours and the markets you operate in. Some contracts will even allow you to utilise your own branding and website if you wish, providing any trading name used is include on the FCA register.
The best of both worlds: This model maintains the freedom of self-employment whilst benefiting from the compliance, technology, and support structure of an established firm. It also removes the full regulatory burden of Direct Authorisation whilst still allowing for autonomy and growth. In short, it enables you to plug and play, so you spend more time engaging with prospects or clients and less time managing your business.
Cons:
Golden Handcuff: Some AR's and Networks (Not us) may offer some form of initial financing in the form of a monthly income, however this is very often a loan against future income and often referred to as a 'golden handcuff', as it would be considered 'industry debt' meaning it would need to be repaid should you wish to further your career elsewhere. Certain networks are notorious for using this as a way of motivating and retaining advisers.
Network Costs (detailed above) will usually form part of the AR's overall offering.
Comparing the Three Routes into a Financial Advisory career
As you can see, each route comes with its own set of advantages and drawbacks, depending on your goals, risk appetite, and long-term ambitions. Below, we break down the key differences and considerations:
Employed Advisor | Running Your Own Firm | Hybrid model (How we work) | |
Earning potential | Low - Typically a fixed salary plus commission | Unlimited | Unlimited |
Lead Source | Provided | Self Generated | Provided and Self Generated |
Client Ownership | None | Full Ownership | Full ownership - on all clients self sourced. |
Scalability | Limited | Unlimited | Unlimited |
Admin Responsibility | Low | High - You need to manage everything yourself and hire appropriate staff | Low - The AR will take responsibility for most essentials. |
Risk | Low | High - You'll be running a whole firm | Medium - You'll have no salary but a large support structure |
Advising Tools | All Provided | None - You'll need to establish and configure your own systems | All Provided |
Freedom | Low - You'll be required to work fixed hours, with limited days off. | Medium - you have the responsibility of a whole business which may take over your life. | High - You can choose your hours of work without the burden of responsibility of managing the entire business |
Conclusion: Choosing the Right Path
Your choice between these three models depends on your priorities:
Security: A structured role, and minimal business management, employment under an AR/Network is best.
Independence: A higher long-term earnings, and control over your brand and clients, running your own firm is ideal—provided you can handle the workload and risks.
If you want a blend of autonomy and support: With the ability to grow a client book without full regulatory responsibility, the hybrid model of self-employment under an AR/Network may be the best route.
Each path comes with trade-offs. Understanding the differences in client ownership, earnings potential, and time spent managing a business will help you make an informed decision that aligns with your career and lifestyle goals.
Considering self-employment as a financial adviser in the UK? Find out why Keystone offers the best of both worlds.