Sanlam: We will pay less for firms that are not RDR-ready

Adviser firms looking to sell in the run-up to the Retail Distribution Review may lose out if they neglect to prepare for the rules changes, as this could negatively affect the value of their company in the eyes of a potential buyer.

In an interview with FTAdviser on Sanlam’s preparations for RDR, to be published later today, Oliver Couchman, head of partnerships at Sanlam UK, said how close a firm is to RDR compliance is one of several factors which will inform its buy-out price.

The company is very open about its aggressive expansion plans, with at least four more advice firms due to join the company by year end.

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Overall, the company is aiming to have completed more than 20 acquisitions by the end of 2012, with last week’s purchase of English Mutual being the fourth announced over a span of three days.

Mr Couchman told FTAdviser: “We have got about 12 indicators including RDR preparedness and the propensity of the advisers to be advising successfully and compliantly in the years to come.

“We would change that part of our valuation based on that, to help with some of the training if they weren’t doing it themselves.”

Along with a plan to increase adviser numbers, Sanlam is looking to buy client books, provided each client would bring in at least £500 renewal income per year.

Some predict a significant exodus of advisers as the RDR comes in to effect. If this is the case, some firms who are looking to sell in order to avoid the burden of preparing for the regulatory change could receive a less-than-optimal buyout price.