Perhaps understandably there has been a lot of focus (once again) on the future of the network sector, particularly following Sesame’s recent decision not to offer its wealth firms an AR option. The two recommendations given by Sesame for such firms are to move to DA status within the Bankhall side of the business, or seek a new network partner. Sesame has a preferred option for those firms picking the latter choice and one presumes that the whole ‘moving network’ process will be, shall we say, ‘facilitated’ if they stay AR and go with the recommendation.
Following on from this announcement – and let’s be frank it can’t be a surprise to anyone who saw Aviva’s view on the future of the network – there has been much pontificating about whether this signals another nail in the coffin for the network model. To my mind, nothing could be further from the truth and the future for networks is assured with firms likely to continue choosing to become or remain ARs and wanting to work within a quality network umbrella.
There is however a caveat to that particular point and it is around the notion of what a network is, and should be, both now and in the future. Historically, the large networks have attempted to be all things to all men, huge ‘catch-all’ operations trying to appeal to firms with a variety of needs in many different product areas. Thus we have ‘not-so super tanker’ networks which take in wealth firms, or mortgage and protection firms, or more focused financial advisory firms.
The problem with this approach is that it can be a veritable minefield for both Principal and AR firm. With no speciality, the network can become a mish-mash, offering middling services in order to appeal to as wide a catchment area as possible, when what most AR firms are looking for is a Principal completely in tune with what they do, and able to offer top-of-the-line support, resources and business opportunities in their particular sectors.
It’s for this very reason that Stonebridge has chosen to operate purely in the mortgage and protection arena. We too looked after wealth management advisers but we quickly realised that our knowledge, experience and skills lay elsewhere. In effect, we would be doing our business and that of those wealth advisers a serious dis-service had we to kept on plugging away in a market which we did not see a future in. We therefore made the decision to concentrate on mortgages and protection and, looking back on that, I think it has proved to be the right decision for all.
And this is where I believe the future of the network model lies – not in a jack of all trades, master of none approach, but in a ‘being the very best you can be’ in certain areas. In our experience, AR firms want to work with a network which completely understands what they are doing, what they need, and how they can develop and grow. For Stonebridge, these are mortgage and protection-focused advisers who are as completely immersed in these sectors as we are. From every single perspective, being a specialist in these markets works because we know what we’re doing and, quite crucially, our AR firms can feel the same about their own work and ours.
Having that certainty, coupled with all the focused services this type of network can provide, allows firms not just to tread water but really motor forward. I have heard this approach described as ‘sticking to your knitting’ but it is much more than this because for a start you have to know how to knit in the first place. Once you’re comfortable in that regard, you can then move on to building a truly sustainable network offering that has, what we might call, ‘specialist mass appeal’. In other words, all firms who are active in those areas can count on this specialist partner that provides everything they need.
To that end, the network model as a concept is not dead neither is it anywhere near to drawing its last breath. Instead, the successful operators have evolved away from the network ‘host’ and it will be these variations on a theme that are likely to be here to stay for many years to come.
Richard Adams is managing director of Stonebridge Group