One of the things that attracted Tim Sargisson to his role as Sandringham Financial Partners chief executive was not having to sort out problems from the past. Launched in late 2012 with the post-RDR world in mind, the national restricted advice firm was relatively new when he joined in 2015.
He says: “The fortunate thing was not having to deal with legacy issues. People still talk about the RDR as regulatory innovation.
“But it’s not just about better qualified advisers and banning commission – it’s about best practice and the shift to an adviser/client relationship.
“For a long time, product providers were the most important party as they paid the adviser. In some situations, the customer was seen as peripheral, but the move away from commission has changed that.”
Last year was a good one for Sandringham, which is built on a structure of adviser partners. It increased partner numbers by 25 per cent to 160 and the average income per partner also rose by 25 per cent. It invested heavily in IT and improved resources to ease the administrative burden on its partners.
This year, the plan is to bring another 90 partners on board. But Sargisson says the firm has no interest in going beyond that. “We are building on the momentum generated in 2016. We have made improvements in our processes and our message about how Sandringham fits into the advice distribution landscape is getting stronger. We have had more interest from people who would not have given us the time of day before.”
Part of that interest can perhaps be explained by restricted advice seeming less of a bogeyman now the initial post-RDR fog has cleared. Sargisson believes there are real opportunities in the restricted market. “But I don’t think there are legions of advisers who are ready to hang up their independent hats.”
Reasons to go restricted
For the chief executive, being restricted – and to some extent the move to automation in the advice process – is less emotive and more pragmatic. It is about things like greater efficiency and leaving the adviser free to focus on client relationships, rather than getting bogged down in tasks like administration.
“Choice is secondary to delivering great client outcomes. People see restricted as being owned by a larger parent company or as a shop window for providers, but we’re not. We choose to be restricted.”
As a former IFA, Sargisson has no axe to grind.
While he was chief executive of Sipp platform James Hay Partnership, following Santander’s sale of the business to IFG Group in 2010, he faced the challenge of winning advisers back to a brand that had lost its appeal. Sargisson admits he is glad he is not in that market now.
“The past six years have been a perfect storm for independent platforms.
“First, in financial services, we are seeing a commoditisation of products and services. This leads to them becoming indistinguishable from one another, so they compete on price.
“We have seen a race to the bottom but the problem with the Sipp industry and platforms is that standards will continue to improve.
“The way you develop the business usually means expensive replatforming or improving the technology. Margins and revenues are under pressure and you are expected to be efficient and keep delivering improvements.”
Sargisson also points to the difficulties around non-standard investments and
expects the regulator to keep up the pressure on Sipp providers in relation to suitability.
“If Sipp providers are culpable with a lack of due diligence, they may be expected to get their chequebooks out to make up the shortfall.”
On top of this, the changes within the pensions industry are almost enough to make a grown man cry. Sargisson is not on the verge of tears when comparing today’s pension system with the one he recalls from his early days in financial services, but he laments how much things have changed due to politicians being unable to leave well alone.
“Defined contribution schemes were simple and straightforward in the 1980s. Looking at what we had compared to what we have now, we should weep.”
While simplification was the goal a while back, he believes we have ended up with “pension obfuscation”.
“We have made improvements in our processes and our message about how Sandringham fits into the advice distribution landscape is getting stronger.”
Pensions have played a big part in Sargisson’s financial services career. Starting as a graduate trainee with National Provident Institution before becoming an IFA, he joined IFG Group in 2002 as managing director of The PAL Partnership. Before that he was at Smith and Williamson Interactive Pensions Exchange, a firm developed in response to the launch of stakeholder pensions.
Given the growing role of the workplace in getting people engaged in pensions and saving for retirement, does Sargisson think stakeholder schemes would have been more successful if they had run along similar lines to automatic enrolment?
“Probably. The Government was being proactive in trying to reduce the liability of the state pension on future generations. Stakeholder was compulsory in that if you had more than five employees, you had to do it. But there was no compulsion to put money in, meaning some stakeholder plans were set up with nothing in them.”
Sargisson is mystified as to why the low charges of stakeholder schemes were seen as an incentive to save in them.
“Stakeholder did have some success in forcing providers to reprice their back books as they were under threat from it. A lot of back books got repriced and some advisers did well in moving from legacy schemes to new schemes
and earning commission from it. So stakeholder did have some success, but it was not how it was meant to be.”
What is the best bit of advice you’ve received inyour career?
I remember someone saying years ago that you can get anything done if you are willing to give away the credit. I think the people working with me always feel they are the ones who get the glory.
What keeps you awake at night?
The dogs who decide 3am is a good time for a spot of barking at the moon.
What has had the most significant impact on financial advice in the last year?
Brexit. We have been inundated with questions about the impact.
If I was in charge ofthe FCA for a day I would...
Be more proactive than reactive.
Any advice for new advisers?
Come on in, the water’s lovely! There’s no better time to join the industry.
2015-present: Chief executive, Sandringham Financial Services
2013-2014: Chief executive, IFG Financial Services
2010-2013: Chief executive, James Hay Partnership
2002-2010: Managing director, The IPS Partnership (previously The PAL Partnership)
2000-2002: Marketing director, Smith & Williamson Interactive Pensions Exchange
1989-2000: Director, Lucas Fettes & Partners
1987-1999: Agency representative, National Provident Institution