Sesame to scrap investment advice network

Sesame Bankhall Group will no longer operate as a network for investment advisers as part of a fundamental overhaul of the business.

There has been uncertainty over SBG’s future since February 2013, when Money Marketing reported it had been put up for sale. SBG later confirmed it was carrying out a strategic review of the business.

Over two years since that work started, and after shareholders backed Aviva’s takeover deal of Friends Life last week, SBG has reached a decision on the advice firm’s future.

In an update on its strategic review, published today, SBG says it will retain its mortgage arm, which will include the PMS mortgage club and a network for mortgage firms. This will represent around 25 per cent of UK intermediated mortgage lending.

Under the new structure, the network for investment advisers will cease to exist. Appointed representative members will have to choose between going directly authorised as part of Bankhall, or moving to a new “network partner”. SBG is in talks with a network about taking on Sesame ARs, but has not disclosed which distributor this is.

Advice firms that do not want to move to either Bankhall or the network partner will have to leave SBG.

Executive chairman John Cowan says: “Our future plans mean we will develop our growing Bankhall business and we will continue to grow our mortgage business, including our AR network option for mortgage firms.

“However, we will no longer offer an AR network option for wealth firms. Wealth firms currently in our network will be given time to become DA with the support of Bankhall. Alternatively, as part of our commitment to offer choice, firms preferring to remain as ARs will be able to move to a new network partner. We are in talks with another advisory group to help facilitate a smooth transition for those firms who would prefer this route.”

It is expected that more details will be announced before the end of April, including the identity of the network partner.

Friends Life group chief executive Andy Briggs, who will become chief executive of the enlarged Aviva/Friends UK & Ireland life business, says: “The SBG leadership team is well-placed to continue to deliver improvements to the business and further strengthen it for the future.

“By building on the work already done to put the business on a strong footing, I am confident these further initiatives will contribute to developing a successful, profitable and attractive business building on the established strengths in the mortgage business and Bankhall.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. The worst kept secret in the business. I can’t understand why every investment adviser who was an AR of Sesame hasn’t already got a bolt hole ready as this has been on the cards for some time. They have made it nearly impossible to operate as an investment adviser during the past few years and have made such ridiculous decisions as a network this was always the outcome. Their original restricted panel was a joke based on whatever criteria Sesame decided applied so you could be on it, leaving some of the top product providers out of the equation all together. This and the fact the FCA has them on their radar left no doubt where they were going as a network. A shambles by any other name.

  2. I wonder how many other networks find themselves in a similar position?? will anymore simply close the doors rather than achieve a sale?? FCA wont be looking forward to so many small firms becoming directly authorised, it will be interesting to know who the “network partner” is?????

  3. Jason Brice | 31 March 2015 11:51 am

    it will be interesting to know who the “network partner” is ?????

    You never know they might all end up at Aviva selling their poor performing bonds and Equity Release plans. Just a thought 😉

  4. How strange, despite all the changes in pensions etc this seems a very obvious reduction in planned wealth management. If the network does not support the long term objectives of wealth planing, is this a sign of what is to come, ever increasing skills required for a smaller higher value market?

  5. Steven, I don’t think this is about confidence or lack thereof in the future of Wealth Planning. If you keep paying fines to the FCA and have effectively had years of profits wiped out and you cant see that the model will allow future profits why keep going??

    As we know, Aviva have already suggested they are not minded to fund it indefinitely….

  6. In the run up to RDR, SBG were (very) keen to highlight the merits of restricted advice to those IFAs who didn’t want to remain IFA after the changes. From memory I can’t recollect them encouraging a movement to DA via Bankhall (even though this is seemingly of significantly less risk and is akin to a movement from commisison to fees!).

  7. I do have mixed feelings about this, on the one hand its been quite apparent for some time their network model is broken (so others beware), the huge fines, complaints, attrition, and most recent (allegedly) selling of information to data annalists, doesn’t make for good reading.

    On the other hand it goes to show what a mess this industry is in, and a shame that members will have a important decision to make, which may result in some staying (direct or other) and some saying blow this and just quit altogether.

    Then my head kicks in whichever way it will probably cost me money weather its reduced IFA,s or firms, then a good chance my FCA, FSCS, FOS, MAS fees will go up again, then there is the future claims exposure, if the PI run off will not cover this, then more interim levies !

  8. Jason, I understand this perfectly and I also withdrew from investment advice many years ago when I realized, as a business model, it does not make sense. What I feel I am witnessing is a free market with teeth, by way of FCA, showing there is no need for a lot of advisers taking money from investment pots without delivering any true value. A lot of advisers do not add value, we do not increase pot size or have much to do other than the initial sale. It is about time persons working and contributing to personal savings and investments get the benefits themselves instead of life companies or advisers. I simply wonder if this is a sign of what is to come, which would be good for a lot of people. Especially if providers also have to start sharing the losses too.

  9. The end of an era, which is a bit sad, in many ways. Not that I have worked with them, in any of Sesame’s current or previous guises. My guess is Tenet are the ‘mop up’ network, but could be wrong. However, Aviva own a chunk of Tenet

  10. “Jason, I understand this perfectly and I also withdrew from investment advice many years ago when I realized, as a business model, it does not make sense. What I feel I am witnessing is a free market with teeth, by way of FCA, showing there is no need for a lot of advisers taking money from investment pots without delivering any true value. A lot of advisers do not add value, we do not increase pot size or have much to do other than the initial sale. It is about time persons working and contributing to personal savings and investments get the benefits themselves instead of life companies or advisers. I simply wonder if this is a sign of what is to come, which would be good for a lot of people. Especially if providers also have to start sharing the losses too.”

    Steven, I understand what you mean now, agreed, what people are ‘buying’ and ‘how’ from advisers is changing significantly. Yes, predominantly driven by RDR but the general ‘winds of change’ are moving through our industry regardless and at quite a pace…

    With a growing culture of “R U Owed” hitting the industry hard, you can see why networks cant carry ongoing and future unknown liabilities and any prospective purchaser (Aviva) are not prepared to step in…

    I have the same concerns as DH on how this might affect future FCA fees and various levies. I still think other networks will follow….

  11. “However, Aviva own a chunk of Tenet”

    I think its about 48% combined with Friends….. Standard and Aegon owning the rest of course…. hmmmm….

  12. Julian Stevens 2nd April 2015 at 7:12 am

    “the network for investment advisers will cease to exist”. Does this mean they’ll be winding it up completely and, if so, that all future liabilities will pass to the FSCS? After all, it’s hard to see where the money will come from to secure indefinite run-off PI cover, if indeed any insurer would be prepared to provide it.

  13. Kind of ironic how doubt and hesitation, the same reason people come for advice in the first place, is killing off independent financial advice. FCA costs and a lack of clarity in regulation are already major factors and the primary reason Sesame has declined to continue. I tend to agree it is not sustainable for other IFA’s to foot ever increasing fees and banks will inherit the earth by playing the long game. Obvious from the beginning really, since pre-RDR. Tthe fact FCA fees have increased fees 10% again tells the story of their intention; switch to mortgage brokers paying a hideously unfair share as smaller operators are too ineffective when lobbying. I do not have faith that the most enlightened people are making policy as some of the oversights by the regulator have been staggeringly obvious. The future is bleak for all smaller operators who service normal UK citizens.

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