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Categories:Regulation

Balancing act

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Sesame Bankhall Group says it will look to mandate back-office risk processes to its network members but not investment solutions.

Chief operating officer George Higginson, who joined the company in January from Intrinsic, says, following the FSA’s recent work on risk-profiling, the network is developing a proposition to ensure members apply best practice.

The firm is also in advanced talks about a number of investment options it will offer members, although these options will not be mandated.

Higginson says: “I am not a believer in mandating things in terms of investment solutions, I think you should offer that in terms of the choice you give your advisers.

“Processes are different and if it is very clear that you have to comply with the attitude-to-risk paper, then Sesame has to do certain thing to make sure people comply through a back-office solution or attitude-to-risk tool.”

Higginson says plans to ensure Sesame Bankhall advisers are ready for the requirements of the retail distribution review will require a considerable investment. As a result, he does not expect Sesame to increase profits significantly this year, as they did between 2009 and 2010, rising from £3m to £5m.

SGB has around a third of its advisers at QCF level four and Higginson says the firm has the resources to make sure that all those who want to be at the required level by December 2012 will be there. He says: “We are lucky that we have the scale to put on extra sessions if something is not quite going to plan.”

Higginson says it is hard for firms to make a clear decision on whether or not to remain fully independent before the final requirements are announced by the regulator. He says Sesame will support both a restricted and an independent model.

He says: “A lot of people have been very public about their views on independent versus restricted but you cannot possibly choose until you have all the details about the true requirements of being independent.”

Another RDR aid to advisers is likely to come from a factoring facility to help advisers transact regular-premium business after the RDR comes into effect.

He says: “It is something that we are looking into and we have a strong balance sheet. It does not have to be financed on one individual sale but possibly on an adviser’s overall business.”

Higginson would not reveal the number of advisers who have taken up its new platform proposition Sesame One, which is powered by Axa Elevate, only saying that it is ahead of target. He says that, due to its size, Sesame has negotiated a deal to ensure Sesame clients pay less than Axa Elevate retail clients for the platform.

Higginson believes advisers do not give themselves enough credit for the role they provide. “I don’t think advisers believe in themselves enough. In this profession, you have to be able to earn money for giving advice.”

He says Sesame is not pursuing further acquisitions following the recent integration of Bankhall but would not rule out another possible purchase if the right deal came along.

He says: “I can say right now that we are not in discussions with any other firms over acquisitions but I would look foolish if I ruled it out completely and then six months down the line a great deal was on the table.”

Higginson insists that SGB parent group Resolution is fully behind the company’s strategy and will continue to back the firm. He says: “Having such a strong parent is good. There are not a lot of distribution companies in the position we are in. I would not have come to this company if it was going to be sold off. Everything Sesame is doing is part of a long-term plan.”

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