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By Michael Trudeau | Published Aug 17, 2012

Forget independent versus restricted: Sanlam’s RDR plans

It could be seen as unconventional, but Sanlam Private Wealth’s ‘hybrid’ model - which allows advisers to offer a Sanlam-only or whole of market solution for investments - is an effective alternative to both independent and restricted advice, according to the firm’s head of partnerships.

You don’t hear of many adviser firms marketing themselves as both restricted and independent, and while he won’t specifically use those terms in the marketing, Sanlam UK’s Oliver Couchman hopes his company will cater effectively to both demands post-Retail Distribution Review.

Surely the FSA would frown on a firm effectively claiming to be both restricted and independent. After all there have been plenty of debates about how independent advisers might be forced to use the restricted title if the company they work for has any restricted elements within its offering.

Apparently not. According to Mr Couchman the FSA has mentioned this third way in its documentation.

Ultimately we trust that the adviser owns the relationship with the client and can make the final call on the total expense ratio

There are compromises, though. Mr Couchman very pointedly specifies, for example, that advisers at the firm will not be called IFAs, but rather financial planners. This term would allow them to move between a Sanlam-focussed ‘restricted’ model and a whole of market route.

He says: “Sanlam in the UK has embedded the hybrid model. What that means is we have a focused approach for streamlined, cost effective client outcomes, but at any time if the client wants or needs a whole of market adviser we can immediately provide that.

“The FSA has in some of their documentation said that some businesses will look to offer a hybrid approach in their firms.

“An adviser within Sanlam Private Wealth is a financial planner. We don’t have a great big independent versus hybrid debate. The term financial planner shows you do thorough financial goal planning for the client.”

The trick, he adds, is ensuring the approach is appropriately explained and marketed to clients. With Sanlam’s adviser pool is increasing, part of Mr Couchman’s job description these days is tutoring new adviser on how to promote this ‘financial planner’ approach.

Cost savings

One recurring theme in the run-up to RDR is what fate awaits low-value clients. Some firms will launch non-advised options, others will hold on to low-value clients and take the accompanying hit to profits, and others will focus on a narrower niche of higher-wealth client.

By offering both a restricted and whole-of-market options, Mr Couchman claims Sanlam may be able to appeal to clients on a tighter budget and throughout the value spectrum.

“The focused route, because of the natural economies of scale [and] the size of Sanlam, obtains institutional cost savings for money management. Our own streamlined products are very keenly priced and the combination of our low money management with product means there is no fat around the pricing.

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