Sesame Bankhall Group has ended a chapter in the life of its 25-year old network by closing its appointed rep network for approximately 300 wealth advice firms.
John Cowan, executive chairman of SBG, said: “The network model has been challenged over recent years, especially with RDR.
“It created a whole lot of business models for those in wealth management and we came to the conclusion that our one-size-fits all network model did not work any more, from a risk or a cost point of view.”
He said many ARs had been moving to become directly authorised though Bankhall since SBG announced in 2013 that it was adopting a restricted model, and expected this to continue.
According to latest figures, there are approximately 1,000 firms in the AR network. Of this, roughly two-thirds are mortgage, protection and GI advisers. One-third are designated investment firms, or wealth management firms, meaning there will be roughly 300 firms and 600 individuals affected by the changes.
PMS and Bankhall will remain and will see the range of services expand over the next few months.
Under the new arrangement, AR wealth advisers can choose to become directly authorised by Bankhall, change their permissions, make their own arrangements to join another network or firm, or take up SBG’s offer to transition to another network.
Mr Cowan said: “We are in talks with one wealth management group to help facilitate a smooth transition for those firms who would prefer this route.”
He said the name of the group was “confidential at this stage”.
Speculation has suggested Old Mutual-owned Intrinsic, which has been operating a restricted model for its wealth advisers for a while.
Mr Cowan did not comment on any speculation but said all the “nuts and bolts” of how the restructured business group would look would be revealed by the end of April, including tools and services for Bankhall to deal with the growing at-retirement market.
Mr Cowan insisted that the FCA fines of £6,031,200 in June 2013 for failing to ensure advice was suitable and the October 2014 fine of £1,598,000 for setting up a pay-to-play scheme, were not behind the decision.
Back in January 2014, Campbell Macpherson, former human resources director of pre-merger Sesame from 2003 to 2006 said Friends Life had three options for SBG: make the current structure work, find another buyer or break it up and sell its constituent parts.
At the time of the Barclays Capital review, market speculation predicted that the Bankhall support services group was the most likely to be sold off.
However neither the Barclays Capital review into SBG back in 2013 nor the Aviva merger, which was approved last week, were behind the decision. Mr Cowan said he had been asked a year ago to develop the strategy within SBG and Friends Life. He has also been to lead the business.
Graham Cross, chief executive of London-based Helm Godfrey, said it was not looking to partner with Sesame but said it was on an adviser recruitment drive. He said: “I know from having spoken to a few of the Sesame people that support is an area being taken away from them gradually and if any of them are concerned they might want to have a look at a firm like ours that gives them that support.