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Ex-IFA plots roll out of new venture to buy client banks

Ex-IFA plots roll out of new venture to buy client banks

Former IFA Trevor Newham is set to launch what he describes as a “ground-breaking proposition” to help advisers who are looking to leave the sector by buying their client banks, but not the assets of the business.

Mr Newham told FTAdviser his team are particularly interested in advisers whose clients are largely serviced through the use of a platform, adding that the future servicing requirements of clients will be a “key element” of the offering.

The launch, planned for April 2015, is in response to Mr Newham believing that a “growing number” of advisers will be retiring over the coming years.

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However, data from NMG Consulting in December 2014 found that only 1 per cent of advisers said they intend to leave in the next six months and a further 1 per cent said they intend to leave the industry in the subsequent next six months

A spokesperson for NMG told FTAdviser that the figures have not really shifted for some time and that this is simply “natural attrition”.

The new venture, currently unnamed, will be attractive to advisers “looking for a way out”, Mr Newham added.

“While there are a number of businesses in the market looking to acquire established firms, so-called consolidators, currently there is no obvious option for advisers who do not meet those consolidators’ acquisition criteria.

“Indeed, many smaller IFA practices don’t want to be swallowed up by such firms.”

The nature of this proposition is such that, as long as the existing adviser considers there is value in their investment and pensions client bank, processes can be put in place to “realise a value” for the adviser.

Often consolidators would require the advisers to remain with the business for a number a years. Mr Newham stated that his solution will enable advisers to give up their investment business authorisation and provide a capital value for their investment client bank.

“Importantly, this proposition will also provide a robust solution to the ongoing servicing of clients’ investment advice needs which will give those clients real confidence and peace of mind moving forward.”

Ian Broadbent, director of Home Financial Ltd and a former adviser, said that while he does not have any objections to these sorts of companies, he has concerns about what they are actually buying.

“Are they buying the liabilities and/or client names? Are the clients happy to be referred to a third party? All client will have to be written to, stating they will be referred to a third party.

“Clients have busy lives and I think next to nought will respond.”

Mr Newham spoke to FTAdviser in January 2013 about another business proposition aimed at advisers exiting the industry as a result of the RDR, which sought to give them an opportunity to earn referral-based income from their client bank after being de-authorised.

The business, Freedom Partnership, was set to launch in Q1 2013 and is now listed as inactive.

donia.o’loughlin@ft.com