One of the most powerful emotions the human mind can experience is that of betrayal.
As many psychologists who have studied its impact on people’s lives have found, its effect can be devastating.
The US author Rodger Jackson writes: “Betrayal acts as an assault on the integrity of individuals, affecting the capacity to trust and contracting the possibilities of the world by increasing distrust and scepticism.
Betrayal changes not only our sense of the world, but our sensibility toward the world.” But for betrayal to take place, it seems to me, it must be something entirely unexpected, something with the capacity to shock precisely because it was considered to be the least likely option by the person who experiences it.
Which is why, when an IFA who happens to be a member of Sesame emailed just over a week ago to complain about the fact that his network is to become restricted, I could not understand why he was using the word “betrayal” to describe what was happening.
Yes, my friend was incensed by the move. He intends to remain independent and is not keen on the alternative option Sesame is offering, that of becoming directly authorised and using the services of the company’s support services provider arm, Bankhall.
As a result, he faces an enervating few months as he disentangles his operation from that of Sesame and finds another network to join. The costs, certainly in terms of his time, will be substantial.
I wish him luck in his search for a new network, for I suspect it will be a difficult one. I don’t see a huge movement towards maintaining current IFA status within a network environment.
Again, however, the word “betrayal” is a far too strong to describe the announcement. After all, Sesame has hardly been the greatest champion of genuine independence for years.
The reality is that for at least eight or nine years, Sesame has explored every possible way to move as many of its advisers away from even the old-style definition of independence.
Back in 2005, in the immediate aftermath of depolarisation, Sesame was one of the first networks to create a multi-tie proposition, Sesame Select, in which it created a panel of providers that included Axa, Legal & General, Norwich Union, Prudential and Standard Life.
At the time, even though its own research months earlier found that 73 per cent of IFAs wanted to retain their independence and only 9 per cent welcomed a multi-tie set-up, with the rest undecided, Sesame still went ahead with its plans.
Sesame commercial director Charles Bryant, who jumped ship from the network only a few months later, managed to keep a straight face when discussing the survey, insisting against all evidence to the contrary: “From these findings, the independent model continues to prove the most attractive to IFAs, with the multi-tie model attracting increasing interest from advisers.
“IFAs must assess the needs of their clients before deciding on the most appropriate route for their business. Ultimately, depolarisation is about consumer choice and disclosure, not independent status multi-ties. No doubt, what will emerge is a more streamlined industry focusing more on the value of quality professional advice.”
Having suggested that upwards of 25 per cent of IFAs would eventually go down the multi-tied route, Sesame Select managed to recruit several hundred advisers in the months that followed its launch in July 2005. But the operation has never been delivered success on a scale that that the company wanted.
Not one to admit defeat, Sesame launched a new restricted adviser proposition some 18 months ago, this time using a white label version of Axa’s Elevate Platform and a limited fund range from Optimum Investment Management.
A reasonable interpretation of this relentless move to restrict choice offered to consumers is that long before the recent FSA-inspired reforms, Sesame has long wanted to do away with the complexities, not to mention the expense, involved in operating a network of genuinely independent financial advisers.
The introduction of the RDR offers another opportunity to move away from the perspective of whole-of-market independent advice to the restricted model. Sesame is banking on the fact that advisers will want to retain their long-standing remuneration models and opt to become restricted.
Ironically, having spent the last 10 months studying the market to see whether IFAs were really interested in moving down the restricted route – and discovering to its chagrin that the vast majority are not, so far – Sesame has decided it will prod them in that direction anyway.
Will its strategy work? Well, it is certainly the boldest move so far. Sesame clearly would also love for its proposition to be called “whole-of-market”, or a variant that allows the distinction between independent and restricted advice to be blurred.
Personally, for the sake of advisers who want to remain genuinely independent, as well as the many thousands of clients they serve, I hope the strategy fails.
Sesame’s actions may be nothing like the “betrayal” my new friend claims it to be, but they are an attempt to railroad its members willy-nilly into a new business structure they didn’t ask for and would not want if they were offered a genuine choice. And neither would consumers.
Nic Cicutti can be contacted at firstname.lastname@example.org