The simple fact is that many firms do not find multi-ties attractive as they stand. The two biggest players in the market, Norwich Union and Standard Life, are likely to top any adviser’s proposed multi-tie panel. But what is the incentive for these two life offices to open their chequebooks and hunt down these deals? A recent report by management consultant Carisbrooke Consulting questioned why top life offices, particularly Standard and NU, would want to pump money into networks and other adviser firms when they know they will get a huge part of their business anyway. Carisbrooke director Robert Wood says: “The industry’s response to multi-ties has been slower than many expected and individual IFA firms remain largely apathetic in the absence of a well-articulated and compelling proposition. While providers are being consulted and their ideas welcomed, they have limited control over the final offering and even less in the ongoing governance and direction of the multi-tie. “Standard and NU will be natural choices on most multi-tie panels and are consequently not threatened by depolarisation. Interestingly, while Standard and NU are not threatened, we see little upside for them and so would not expect them to be innovators.” The evidence supports this to an extent, in that Standard in particular has been slow in signing up to multi-tie panels while other life offices, such as Prudential and Friends Provident, have been much more active in this area. Standard Life sales director Nathan Parnaby says while the life office may not be an innovator in such deals, they are of commercial interest because its position in the market is not set in stone. He says Standard has not yet signed up to any network because the terms have not been commercially attractive to itself or, he believes, the end consumer. But he says the big two life offices cannot be complacent about their market position and Standard remains in discussions with several networks and is still interested if the deal is right. “We have been very interested in reaching multi-tie agreements with networks but there a lot of issues around profitability and we have not signed up to any yet. There are models around that are unacceptable to us but on the right terms we would do it,” says Parnaby. NU Life chief executive Gary Withers says he believes the market will consolidate further and NU will be the first insurer to capture a 20 per cent market share on a medium-term outlook, up from 12 per cent. Sesame commercial director Charlie Bryant does not believe this is necessarily the case, however, and says it is crucial for Standard and NU to secure distribution arrangements. He thinks the growth of open architecture will erode the value of providers’ brands to the extent that life offices will evolve more as suppliers of tax wrappers, with individual fund managers underneath running the assets. Bryant says: “The conventional wisdom is that advisers need big brands to sell products but that will not be true in the future. Historically, IFAs have advised between, say, Standard or NU bonds but increasingly it is a lot less about choosing between providers’ products and more about focusing on asset allocation between the underlying fund managers.” Regardless of the long-term trend, however, he admits that advisers will clearly want NU and Standard on their panels due to the strength and depth of their product offerings and the life offices know this. This is arguably at the heart of the impasse. Parnaby says: “We cannot afford to pay big sums. We know networks’ memberships will want Standard and NU on their panels and that obviously gives us some advantage.” Wood says networks are deluding themselves if they think providers will stump up lots of cash to get on to their panels. Not only have many providers displayed apathy towards such deals but the FSA is keen to ensure the two parties have arm’s-length relationships, which could dilute providers’ interest by curbing their influence over the networks. Wood also suggests that many individual advisers are less than enthused by multi-ties because many of the benefits may be retained by the network and, ultimately, its shareholders, with little trickling down to the RIs. He projects that individual advisers will typically earn only about 2,400 extra commission a year from multi-deals. “The remainder will be retained by the network or distribution firm. Perhaps this explains the lack of excitement in the IFA community,” says Wood. But Bryant says this overlooks the many benefits of multi-ties, such as enhanced commission, better technological interfaces between advisers and providers and help with PI cover and regulatory issues. There remains considerable debate around how, when and if multi-ties will take off. It is clear that initial expectations have had to change as firms face the realities of funding these deals and making them profitable. Bancassurers have adapted well to the new environment but advisers will have to look beyond their occasionally fractious relationships with life offices if they are to make this work.