L&G welcomes smaller advisers into the AR fold

21 September 2009

As a result L&G Partnership Services has always had a low AR count compared with the likes of Sesame, Openwork and Personal Touch Financial Services.

A review of networks by Which Network in June this year found that L&G’s network was in 12th place with 201 ARs compared with the 1,883 ARs at Sesame, which was in first place.

But the network has now reversed its decision not to deal with smaller firms, as revealed by John Pollock, group executive director of protection and annuities at L&G, in an upcoming exclusive interview with Mortgage Strategy.

Pollock points out that in the past smaller AR firms were advised that if they wanted to be supervised by L&G they would need to fold themselves into one of its larger firms.

This company would then manage the smaller firm’s compliance support and training.

But there have been major changes in the network market this year, with many firms going bust and ARs looking to move away from their current networks. As a result, in addition to the larger ARs of L&G Partnership Services mopping up these firms, the network is offering them a direct proposition.

Pollock says: “We have decided to directly supervise some smaller advisers. This is not what we have previously done but because we have such strength in managing compliance we are able to take the responsibility and manage that element for advisers.

“This move was driven by the fact that so many players have been leaving the market - we have the training packages, compliance expertise, technology and capital base to attract firms to us.”

Kevin Friend, strategic partnerships director at Mortgages.co.uk, says that L&G’s business model in the past has been the reverse of its main competitors in the network sector, with a focus on the quality of ARs rather than their quantity. But he adds that in the past year this model has come under pressure as a result of falling mortgage sales and churn in the life insurance sector.

Friend says: “It’s a case of getting the right balance between taking on a large number of ARs and being choosy, then finding you have too many eggs in one basket when you are exposed to a dead mortgage market and a highly competitive protection market.”