View more on these topics

Wilson blasts networks’ obsession with size

St James’s Place chairman Mike Wilson says many IFA networks are not viable businesses because they focus on size rather than profitability.

He says: “They have clearly proved they are not viable business models. The only measure of success for a company from a shareholder’s point of view is, bluntly, how profitable you have been.”

Wilson cites the examples of Berkeley Berry Birch, Inter-Alliance and Millfield as businesses that were too concerned with being the biggest.

He says: “Inter-Alliance used to keep on saying it was the largest by turnover and by number of advisers. You measure the success of any business by its profitability.”

Wilson says the competition for advisers means that networks pay far too much commission to their representatives and cannot run their businesses profitably in the long term by retaining only 10 per cent of commission.

He says: “They give away too much of the gross commission to advisers and do not have enough to run their back office. How do you have a proper compliance department when you pay out so much commission?”

Wilson believes this lack of support is self-defeating. He says: “The irony is that a lot of network members are very dissatisfied with the support and end up asking: What am I getting for my 10 per cent?”

Sesame sales and marketing director Stephen Young says some networks have been guilty of this in the past but companies are aware of the importance of making a profit. He says: “In the long run, all businesses must turn a profit to survive.”

See this week’s Profile of Mark Wilson

Recommended

Business threat posed by rises in longevity

The FSA says increases in longevity is a major long-term threat to financial businesses.The regulator says: “Actual improvements in life expectancy may soon exceed the assumptions used in mortality tables produced by actuaries and there is not yet a way to hedge comprehensively against this uncertainty”.The warning comes in the FSA’s Financial Risk Outlook 2007, […]

Rooftop hit by Fitch’s latest predictions

Fitch Ratings has piled on more pressure on lender Rooftop by stating it expects its already-troubled second portfolio of securitised mortgages to continue drawing on its reserves.The agency predicts that Farringdon 2 is likely to continue to seek help from its reserve fund in the coming months. The news comes three weeks after it plugged […]

Packager market worth up to £30bn, claims TMB

The Mortgage Business has estimated the size of the packager market to be worth between £28-30bn.It says the sector has grown by a remarkable 30 per cent since pre-regulation, with the rise coming despite a number of industry figures warning there would be no place for packagers post-regulation.TMB managing director Nigel Payne says: “These numbers […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com