From Adviser Guide:
Picking a network part 1
Q: What should I ask a network?
Think about the business you want to build and then assess which Network is best placed to help you achieve that goal.
According to Nick Kelly, managing director of Sesame Bankhall Group, there are a number of important areas to cover:
1) Financial strength
Can the network demonstrate a track record of profitability and strong financial governance?
For example, do they carry capital reserves several times greater than that required by the FSA’s most stringent expenditure-based test, giving advisers complete confidence in their ability to support them?
2) Capital resources.
Going beyond capital adequacy as mandated by the regulator, does the network have liquid assets to commit to the business and its membership long-term?
For example, is the host actively providing cash loans to help firms acquire assets and re-engineer their business in preparation for the Retail Distribution Review (RDR) world?
3) Ongoing investment.
Are funds being made available to enhance the infrastructure and service to network members, in turn helping them create value in their own businesses?
For example, can the network demonstrate a multi-million investment in infrastructure within the last 12-months?
4) Management expertise.
Is there an experienced and committed senior management team, providing continuity and a long-term vision?
For example, are established industry leaders being attracted to the management team to drive the business forward?
5) Support of a strong parent.
Is there a clear strategic intent to help the business succeed?
For example, do they have the full support of a FTSE 100 company?
Key questions to ask, according to Philip Martin, proposition and marketing director of Openwork, are:
1) What is the contract like?
2) How is your relationship with the FSA?
3) Are your members ready for the Retail Distribution Review (RDR)?
4) Which providers and lenders will I be able to recommend products from?
5) How quickly will I be able to trade if I join you?
6) Do you have a supportive shareholder?
7) Will I have access to platforms?
8) What will you charge me to join?
9) Why are you better than the other networks?
10) How big are you?
11) Are you secure?
In the past, price used to be the first question but this has changed significantly in recent times, according to Keith Richards, group distribution and development director of Tenet.
Ensuring the network can do what it promises from the outset is important and therefore Mr Richards said you should ask for confirmation of their structure and ability to deliver as well as how they are transitioning to meet the new regulatory requirements being implemented in 2013.
He said: “It can often be wise to also ask to visit the head office or operation centre to meet some of the key staff who will be responsible for the delivery of support.”
Mr Richards said this tied in to due diligence and advisers should have a list of key questions to ask any prospective new partner.
However, Mr Richards said in the current economic and changing landscape, choosing a network which is financially strong and well equipped to meet the challenges ahead should also be a key consideration.