Two current appointed representatives of the Sesame network have reacted to news of its closure by stating they will take up the offer of becoming directly authorised through the Bankhall branch of the business, rather than be part of a deal to move to a rival network.
Earlier today (31 March), Sesame announced it will no longer house retail investment advisers, in a move it has blamed on an RDR-inspired “natural migration” towards direct authorisation that is a challenge to the “basic premise of the network model”.
Under the new arrangement, AR wealth advisers can choose to become directly authorised by Bankhall, make their own arrangements to join another network or national firm, or take up SBG’s offer to transition to a new network.
Speculation is rife as to who the network is, but Sesame has said only that it is in advanced talks with one firm. Other media outlets have named Intrinsic as being close to agreeing a deal.
David Drane, partner at New Discovery Financial Services, a Sesame network member, told FTAdviser that the news came as a surprise. He added he would definitely not opt to move to “out of the frying pan and into the fire” by joining another network.
“We knew the review was going on, but the suggestions were that they had taken most of the pain and by this stage they were left with the firms they wanted.
“I suppose discussion must have broken down between Aviva and the FCA as to what to do with the past liabilities; if they’re not willing to take them on then I don’t think anyone else will want to touch it.
“We definitely won’t go to another network; that would be out of the frying pan and into the fire.”
Mr Drane said the most likely option was that it would go directly authorised and would become a member of the sister Bankhall support services business.
Paul Yallop, principal at Parklands Independent Financial Services, said that his firm were already looking to leave and join Bankhall anyway, so this has made the decision easier.
“We’ll now be able to avoid the limbo of not being authorised whilst making that switch to being an IFA again, so it will be much smoother.”
He also stated that the firm would not opt for a different network, stating that if Sesame had the largest economies of scale in the market and still failed that proves that the model will not survive.
Mr Yallop said he was was less surprised by the news, saying that rumours abounded following the network’s head of adviser technology propositions leaving for Succession last week.
Stephen Thomas, partner at The Eurofinance Partnership, said that they made the move to Bankhall when the network announced it was to go restricted at the start of last year and would recommend current ARs do the same.
“Had we gone elsewhere it would have been a lot more difficult, things like commission streams and fees might have been tricky, whereas the move to Bankhall made things easier. Some will warn about the regulatory risks of going independent, but it’s really not so scary.”