They may feel that the choice between Sesame’s restricted panel and Bankhall’s directly authorised (DA) alternative is simply not enough choice.
Obviously, the advisers want an appointed representative (AR)/independent option. That is the option that Sesame, bruised by a recent £6m fine, says it cannot afford to offer. It has a reasonable argument, of course. It can argue that it needs more control in return for the regulatory protection and potential liability it takes on.
When it comes to multi-tied or restricted offerings, for more than a decade I have argued the key question: does this benefit the end consumer and client? John LappinWhen it comes to multi-tied or restricted offerings, for more than a decade I have argued the key question – and one not asked often enough – is: does this benefit the end consumer and client?
Sesame should answer this in some detail as it fleshes out its plans. Often inter-industry debates have left out the client and consumer – for one recent example, see the clean share classes debacle – leaving self-appointed consumer groups and eventually the regulator to do the representing instead.
In this case, if an AR believes that neither the DA option nor the restricted AR model suits them and their clients agree, then I think it is beholden on Sesame to allow them to select that choice.
A lot of small advice firms in the market have suggested that over the years, when it comes to trying to leave a network, networks themselves are not always that helpful or even outright obstructive.
Advisers also say it has always been easier to move where they select the DA option with their existing firm, rather than trying to leave for another network or support firm. That is anecdotal and difficult to prove.
There is no way of knowing how Sesame will approach this issue. But if advisers want to go elsewhere, it seems only fair that Sesame, now its offer is restricted (in the general sense of the word), lets them do so with as little hassle as possible. Ultimately, that is actually the fairest approach to take when it comes to clients too.
This may not be Sesame Bankhall’s intention, but something worth noting is the shadow the highly successful and highly profitable St James’s Place is casting over the IFA market, particularly as restricted becomes more of a mainstream option.
I would argue that for all the widespread admiration for its business model and business success, to me St James’s Place charges sound too high.
It is a shame it does not face more competitive pressure from other advisers, whether IFA or restricted. That it doesn’t is probably less a reflection that you can obtain that advice and fund management more cheaply than that there are simply more than enough clients to go round.
In addition, there may not be much switching following that initial decision to seek advice. But one way Sesame could really stake its claim to be on the side of the consumer is if it resolved to take SJP on in terms of charges.
John Lappin blogs about industry issues at www.themoneydebate.co.uk
