Sesame Bankhall Group has revealed what its member firms have chosen to do following the closure of the distributor’s investment advice network.
In March, SBG announced it would no longer operate a network for investment advisers but focus solely on mortgage distribution. Appointed representatives were given the choice of going directly authorised and buying support services through Bankhall, moving to SBG’s “preferred network partner”, Intrinsic, or leaving the network altogether.
Firms were given three months’ contractual notice to make a decision on their chosen route by 31 July.
SBG has now released estimated numbers on member firms’ intentions. As some firms are waiting to be reauthorised, final numbers are expected at the end of August.
Of the 350 member firms, 150 have decided to move to Intrinsic, 105 will go DA with support from Bankhall and 55 will either move to another network or leave the industry.
The remaining 40 firms have decided to reduce their regulatory permissions and become part of Sesame’s mortgage and general insurance arm.
Based on the value of advice firms and total turnover, Bankhall has emerged as the preferred route.
It is understood some firms that initially opted to go DA were encouraged to find a network partner instead.
The restructured SBG business will house around 1,000 mortgage brokers and aims to build on its DA proposition through Bankhall.
Speaking to Mortgage Strategy’s sister title, Money Marketing, SBG executive chairman John Cowan says Intrinsic was chosen as its network partner due to the fit between the two firms.
He says: “We thought Intrinsic’s strategy was much more focused within the wealth space, which is in line with its parent Old Mutual Wealth’s wider investment strategy. The fact that Intrinsic was already a restricted network also played a role. Ultimately, this was driven by wanting to secure an orderly transition of our investment advisers.”
Cowan dismisses claims that SBG applied “pressure tactics” in getting members to choose its preferred routes of either support services from Bankhall or moving to Intrinsic. Firms choosing either route were offered benefits such as SBG paying Financial Services Compensation Scheme interim levies, not freezing commission accounts and giving firms up to six months to return client files.
But Cowan says: “Advisers had the choice between Intrinsic and Bankhall or going elsewhere. That choice was completely free and there was no financial incentive.”