The loss of advisers to national IFAs and low-cost providers means that Sesame is now worth no more than £80m, according to a report by analyst Durlacher.
The report predicts that strains on parent Misys' corporate strategy could force a sale of Sesame for a fifth of the £400m that the network business was initially valued at.
Durlacher says Sesame's offering was most suited to the 1990s when most of the large direct salesforces were closed and joining a network offered an easy way to establish an IFA business.
The flotation of Sesame has been postponed until 2005 and Durlacher says a trade sale to a product provider such as Prudential or a listed Standard Life or a deal with a group of product providers would be the best way to realise more than the £80m that the business would achieve on the market.
A single product provider might pay £100m for Sesame while a sale to a group of providers could bring in £200m, says Durlacher.
The report also predicts that Sesame will not be one of the winners after depolarisation because it already has some of the highest commission agreements with product providers.
Durlacher analyst David Pannell says: “Sesame now faces serious competition from two groups – low-cost service providers and national IFAs.”
Sesame commercial director Martin Davis says: “Analysts' reports are an opinion and we tend not to respond to other people's opinions. We do believe that the network model is sustainable and for a segment of the market will remain attractive.”