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Restricted model – don’t knock it until you’ve tried it

The restricted financial advice model neatly fits outcomes-driven advice, argues Tim Sargisson, CEO of Sandringham Financial Partners

Tim Sargisson, CEO of Sandringham Financial Partners, believes that a restricted service neatly fits outcomes-focused financial advice, because it does not restrict the ability to deliver full financial advice but rather risk manages the investment proposition. He argues that on the basis that a restricted adviser firm is client-centric, has a process built around providing financial planning for the client in which the investment proposition is not the main focus of the advice but rather facilitates what is, i.e. the goals of the client, then with an investment panel of specific investments and properly managed risk, it is well suited to deliver the required outcome for the client.

Sargisson also believes the advisory market has a huge opportunity now that the value chain in the financial services industry has moved decisively out of the hands of the product providers and into the distribution space. This is offering advisers considerable opportunities over the next few years but firms need to gear up in the right way to take advantage of them, he argues.

“Distribution is where the opportunities lie – the product provider space is becoming completely commoditised – and the adviser space is so exciting right now because there has never been a time when the public is more in need of our support, help and guidance. There is a critical need to make the public aware that we are here to help and support them,” Sargisson says.

Distracted by parochial battles

“Yet so far, as an industry, we have singularly failed to address that – we have allowed ourselves to be distracted by our parochial battles, independent versus restricted advice being one of them. We’ve missed the bigger picture, which is how do we develop a robust customer proposition and how do we then go out there and deliver it to people.”

He continues: “The biggest challenge the industry has is providing solutions that galvanise the population to start using advisers. To make them think – that works for me. We have been absolutely useless at doing that but it’s not an easy thing to achieve. I think it’s down to local people dealing with their local community. Advisers are still the best way to distribute advice but what they need is support from the likes of us to help them do that.”

Yet while the industry is fighting internal battles around the definition of investment propositions that is going to distract from delivering to the public, he says. “They’re the wrong battles – what we should be concentrating on is what we can deliver to achieve customer outcomes.

“There are regulatory issues around demonstrating the kind of investment advice you’re providing but if we park that, then the way forward as an advisory firm is to set your investment process and to manage that process.

“For us that’s not about spending time agonising over individual investments, it’s about saying this is our investment solution, this is how we run and monitor it, this is how we manage the risk within the solution and we believe it’s the appropriate solution for 99% of the population.

“The regulator has a very simple view, it wants good customer outcomes and for that to be evidenced in everything we do. You’ve got to start with that and work out from it. I’ve never met a client who has demanded independent financial advice. Clients use advisers because they like the adviser. Most clients aren’t interested in which investments are used as long as the adviser is looking after them and helping them achieve their goals. The only people who beat themselves up over the independent and restricted badges are people in our community.”

The Sandringham proposition

Sandringham’s proposition provides compliance, an investment proposition, accounting and technology support and is primarily about managing the risks in adviser businesses, Sargisson says. “We take care of the business elements for advisory firms, allowing the advisers to focus on the outcome for their customers.

“It’s not about telling people how to run their business it’s about managing risk. If most people hand on heart were honest about their business they are already restricted, in that they’ve already settled on an investment process that works for them.

“Independence may give them the opportunity to broaden their offer to other investment solutions for certain clients – but from our point of view we don’t want those clients because that is where the risk lies.

“The risks in our industry in recent years have been largely down to delivering an independent solution but not understanding the component parts of that solution. So when they have gone wrong, they have done so in a spectacular way.”

Going restricted may affect sales and “take some of the froth off a business” if the adviser is not researching the entire investment market “but you can sleep better at night knowing you are not promoting something that, while the margins might have looked right at the time, is storing up a whole heap of trouble further down the line,” Sargisson argues.

“What we’re saying is that we have restricted offering that works for most clients but if it’s not for you as an adviser then fine we’re not for you. But for those people it does work for, it absolutely works for them.”

Sandringham AIM listing

Sandringham launched in 2013. Its target market is firms writing around £105,000 a year and it charges 17.5% of revenue for the service.

The business currently has around 125 firms signed and has said it is looking to increase that to 250 within a year. However, Sargisson says what will drive that target is less an ultimate number and more the commercials of running a profitable business. “If growth figures pan out at 200 rather than 250 because the firms we bring on are writing more business and are better suited to our proposition, then we can flex those numbers depending on how we want to deliver on commercials,” he says.

Founded by Ken Davy, the company recently brought in Barry Kayes as chairman, with MD Steve Braidford taking responsibility for growing the business through recruitment and Sargisson, appointed as CEO in July, with responsibility for back-office and infrastructure.

The first 200 adviser firms to sign to Sandringham receive 5,000 shares in the company and an AIM listing has been earmarked for three years time.

Sargisson has set his sights on Sandringham being the leading restricted advice firm in the UK, “in terms of the services it offers, the advisers it works with and delivering good solid customer outcomes. This will be delivered through robust end-to-end IT. That’s my vision,” he says.

“We have the building blocks and with Ken and Barry we have the visionaries with experience. The challenge for the business,” he admits, “will be to get advisers to understand how the landscape is going to look in 3-5 years time and why we’ve got the best solution for dealing with that.”

Visit the Sandringham Financial Partners website

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