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Sesame’s AR network for wealth advisers to close

Sesame’s AR network for wealth advisers to close

The closure of Sesame’s AR business is a symptom of the “terminal decline” of the network in the UK, according to an industry analyst.

Fred Hansson, a partner in London-based Imas Corporate Finance, said his figures showed there had been a decline in Sesame’s membership for several years, and this had accelerated in recent months.

He said: “The network is quite a difficult model because with the regulatory risk you have got all the downside but not a lot of upside.

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“If you look over a longer period of time there is a trend towards becoming directly authorised, because if you are a successful IFA you can provide the same support services for yourself at a fixed cost.

“This is all part of the terminal decline of the network in the UK.”

He added that successful networks would either be owned by a provider and offer an integrated service or offer their own products.

A spokesman for Sesame said: “We advised our members in March that we would no longer be offering an AR network option for wealth firms.

“We have been committed through the process to making the transition for members as smooth as possible and, inevitably, given the complexity of the task, completion dates for individual firms will depend on the option they have chosen.

“We will be sharing more information on the project once the work is complete”.

Earlier this month Sesame Bankhall Group’s executive chairman John Cowan committed to developing the network’s mortgage advice business.

Mike O’Brien, managing director of TenetConnect, said the issues around Sesame were particular to that firm.

He said: “Sesame has had issues for a long period of time and the decision to close part of it was a strategic one.”

Intrinsic, Sesame’s preferred network partner to which its advisers can move, was asked to comment, but did not respond.

Background

Friends Life – now part of Aviva – acquired Sesame for £75m from software provider Misys in March 2007. It launched a strategic review, led by Barclays Capital, into the network in 2013.

That same year the business was fined £6m for failing to ensure the Keydata advice it gave was suitable – this amounted to £2m more than Sesame made in profit in 2012.

In April this year, Sesame announced it would be closing its AR network for wealth advisers on Friday 31 July.