Even with this approach, his business has not been able to avoid some controversy, last week coming under fire again for the amount of exit fees it charges advisers moving to become directly authorised.
Mr O’Brien’s comments were more focused on overall growth strategy, with Tenet favouring a “steady as you go approach, not looking to buy distribution aggressively and seeking appropriate compliance with any moves”.
Recent weeks’ news has been dominated by Tavistock’s surprise acquisition of ailing network Financial Limited - which had issued heavy losses the week before, and faced Financial Conduct Authority enforcement - along with Aviva’s acquisition of Friends Life raising risk warnings about the long-term viability of network Sesame.
“There are always still difficulties around not knowing exactly what you’re buying, it’s so tricky to accurately quantify legacy issues,” commented Mr O’Brien.
“We would rather buy assets than the actual firm, although less of those deals exist these days and it’s hard without having deep pockets.”
He added that Tenet also takes a “firm line” with appointed representative advisory firms in terms of esoteric assets, preferring to stick with mainstream funds to decrease potential risk.
Last month Tenet posted a 6 per cent increase in headline turnover to £125.2m in its annual report and accounts for the year to 30 September 2014.
Philip Martin, Openwork’s proposition and marketing director, agreed with Tenet’s approach, pointing out that as a restricted network it controls what its members advise on, avoiding exposure to scandals like Arch Cru for instance.
Last year, Openwork posted its second successive year of profit.
“Ensuring our advisers provide high quality advice on a market-leading proposition is central to everything we do. From that, profitability and a clean regulatory position can be delivered,” he added.
Stephen Young, commercial director of at the Sense network, told FTAdviser that they have never sought growth at the expense of quality, adding that it only recruits firms that operate a client service focussed business model.
Last year, FTAdviser reported that the network saw its pre-tax profit jump by 53 per cent to £647,000 on the back of a 37 per cent increase in turnover to £18.7m, for the 12 months to the end of May.
“Historically, large networks grew by compromising on quality standards. Perhaps it was flexibility around recruitment standards or perhaps by checking smaller numbers of client files. Whatever the compromise is, the results are almost always the same: FCA sanctions and extensive past business reviews.”
He added that Sense’s strategy is to continue to grow organically by attracting firms who are happy to outsource back office functions, whilst focusing on delivering great service to their clients.
“We have no plans to undertake any acquisitions as we believe that they rarely deliver value.”
peter.walker@ft.com
