Sanlam’s move to charge annual fees of £20,000 or more has caused several advice companies to hand in their notice and seek other means of operating in the market.
According to the adviser network, about 30 appointed representative companies have handed in their notice and almost 10 had already left the network, but Sanlam pointed out that fees were not necessarily the cause in all of these cases.
A Sanlam spokesperson said: “Fewer than 10 have actually left. Around 30 have resigned, but a number are now reconsidering, having looked around.
“Not all are leaving due to fees; some are retiring and some are selling their business.”
It comes after FTAdviser reported earlier this year that from April 2020 Sanlam would move to a minimum fee of £20,000 a year for all ARs advising on pensions and investments, regardless of turnover.
Sanlam confirmed this proposed “strategy review” went ahead and said it now “feels positive about the future direction of the network”.
However, this move saw some advisers’ fees double and, at the time, Sanlam revealed that eight companies decided to leave as a result, while the other 22 affected looked at ways to reduce their fees.
In total, the fee change was expected to hit 30 out of 100 ARs.
FTAdviser can now reveal that some advisers have since seen out their three month notice period and have joined other networks or made moves to become directly authorised.
One adviser, who wished to remain anonymous, said the fee hike was the only factor that forced him to leave and become a registered individual at another company.
The adviser originally planned to become directly authorised but due to time constraints decided otherwise.
He said: “In the beginning I thought I may as well try to become directly authorised after the trouble I had been through with Sanlam.
“But, due to time constraints and the arrival of Covid-19, I couldn’t afford to be off work and not receive an income. Therefore I chose to take the easier route and join another firm.”
The adviser was also critical about the way Sanlam went about the fee increase.
“There was no warning, one day we were just told that our fees would rocket in three months’ time and we did not have enough time to react.”
Meanwhile, another adviser plans to set up his own business and is currently waiting for the Financial Conduct Authority to deal with his authorisation request.
While professional indemnity costs are an issue for many in the advice market at the moment, this was not an issue as they were on par with Sanlam’s increasing fees, he said.
He added: “While PI costs were one of my major concerns in the beginning, the quote I received was reasonable and the costs are competitive to what I was paying under Sanlam.”
According to the adviser, other positives of leaving the network included being able to put together his own compliance manual and being able to have his own voice.