Larger adviser firms and networks are likely to consolidate further in 2014 with mergers and acquisitions being sought to generate “scale and strength” as the disruption wrought by the Retail Distribution Review continues, according to the chief executive of Sesame.
Speaking to FTAdviser, George Higginson warned that due to the new requirements brought on by the RDR, the viability of some company’s business models will continue to be questioned. He expects more companies to look closely at their propositions next year.
He said: “I also expect to see more mergers between the bigger companies as they go for scale and strength.”
Sesame itself could be sold in the coming year by parent company Friends Life, which is owned by life insurance consolidator Resolution, after news surfaced in the early months of 2013 that the firm had engaged Barclays Capital as part of a strategic review.
Rumours continued throughout the year that the process could see support services arm Bankhall split from the Sesame Bankhall Group and sold separately, although no confirmation on any sale plans has yet emerged.
Mr Higginson said the regulator will be tougher on advisers in 2014 as a full year has passed since the more stringent RDR regime was imposed and that it will probably focus on those that flout the stringent independent rules.
“Our profession must step up to the mark by ensuring that the right customer outcomes are being continually delivered and evidenced.”
In the autumn Sesame announced it would be moving to a wholly restricted model in 2014, with a ‘whole of market’ but restricted option being introduced alongside a more proscriptive existing panel option. Full details will be revealed at the network’s January annual conference.
According to Mr Higginson, this year Sesame has delivered on a strategy it embarked on three years ago when it decided to change the direction of its business and broaden its range of propositions.
He said: “ This work is paying off, with a particularly strong performance in our investment and mortgage businesses, the latter seeing a 27 per cent surge in the first half of 2013 through PMS and Sesame.
“It also extends to new initiatives outside traditional distribution, such as our mortgage valuations company, which has been very successful.”
Mr Higginson added that the network has “heavily” expanded its technology and now over 1,000 firms are using its new practice management system, and over 2,000 advisers have signed-up for its new general insurance portal.
He said: “This is encouraging as embedding efficient technology underpins our long-term strategy for enhancing the service we provide to members and their customers. Our strong performance in 2013 puts us in good shape for the year ahead. In a tough environment we have made bold decisions, giving us a strong foundation for the future.”
