Keith Richards, distribution and development director of Tenet, answers questions from Will Jackson.
Q: How did Tenet get started? A:
A:Tenet is the largest independently-owned IFA group in Britain, supporting 5,500 advisers through five propositions. The firm has seen positive and steady growth over the years and we have done things in a managed but quiet way. We are viewed by many as a good quality operation and have never offered gimmicks to attract or retain members.
We started out in 1987 as M&E, an IFA providing support services to other businesses. Simon Hudson [Tenet’s chief executive] was one of the founding members. The group started to evolve in the 1990s, acquiring other companies along the way. This gave us diversification and strength. Last year we did a rescue takeover of Berkeley Berry Birch, which brought another 350 advisers into the group.
Four life offices – Norwich Union, Standard Life, Aegon and Friends Provident – each bought about 20% of Tenet in 2005, making it one of the most financially secure companies in the sector. It also gave us the capital to invest in growth. The balance is owned by management and staff. Our head office is in Leeds and there are 350 employees across the group.
Q: What are the five main support companies? A:
A:We have two networks offering appointed representative support – M&E and Interdependence, a competitor we acquired in 1999. IFA Professional is a support company for directly-authorised firms. It was renamed from Adviser Connect, which we bought from Bond Pearce in 2001.
Lime [Lifetime Insurance Mortgage Experts] is a mortgage support network for non-investment firms and Premier, rebranded from Premier Connections in 2004, provides protection expertise and back office support to networks and small firms.
The networks generate the most revenue for the group. We have been able to refine our processes and improve operating efficiencies.
Q: What is the ethos behind the business? A:
A:We want to provide the right support mechanisms to meet the needs of IFA firms and their clients. In terms of the appointed representative or directly-authorised models, we do not consider either proposition to be better than the other. It is about what a firm’s background is, which sector it is operating in and what level of support it needs.
Some firms already have their own compliance officer and infrastructure. Other directly authorised firms want to outsource through the appointed representative model. Our service is finely tuned to the needs of the adviser. A:
Q: What are the services you provide?
A:For most advisers, compliance is at the heart of what we do – it can be a lonely place out there when you are self-employed. We provide compliance training and competence. We also provide business development and an academy to help the growth of advisers.
On the marketing side, we offer a toolkit for advisers. This includes brochure-builders, standard-template newsletters and website support with pre-populated information. Marketing can be a demanding role for small firms. Sole-traders often have good intentions but can rarely find the time to do it.
We also launched Enable, an introducer service. It allows advisers to refer business in areas that they do not usually deal with, while retaining the relationship with the client. Tenet provides advice and pays most of the reward back to the adviser. Equity release and pension transfers are generating high levels of referral.
Q: How does Tenet’s training academy work? A:
A:We can take new entrants to competent status through a 12-month development programme. We also cater for IFAs who want to further their professional qualifications.
Q: The firm launched Clear Advantage last month. What has this added to the Clear wrap proposition unveiled in 2005? A:
A:Clear Advantage is designed for advisers who want to specialise in the investment sector. It provides quarterly newsletters, as well as giving sales ideas to advisers.
We held our first online investment forum last month, where Richard Romer-Lee [research director at OBSR] questioned leading names in the investment sector.
The live session lasted for a couple of hours and advisers were able to submit questions. They appreciate getting direct access to fund managers.
Q: What is your definition of a wrap? A:
A:There has been a lot of hype but many advisers have struggled to understand how wraps can transform their business. It is a technology solution allowing the consolidation and management of a client’s assets. It is not a product. It is a service proposition.
Q: What are the main issues facing IFAs? A:
A:Networks have had some negative press in the past, but we are starting to see the focus swing to the directly-authorised small firm sector. Advisers are worried that the Financial Services Authority (FSA) is targeting smaller firms, concerned that they are not operating in line with its principles.
The FSA has visited several sole-traders recently and there seems to be a growing report of instances where it is enforcing corrective action. This is a challenge for small firms.
Networks have matured and IFAs operate within them under their own trading style and often to their own sales process. For many firms there is little difference and it can be more cost-effective to be an appointed representative. It can be a fine balance. There are a lot of good advisers who simply do not have enough time to meet all of their responsibilities and prefer to outsource the burden.
Q: How do you respond to suggestions that some of the larger banks are set to dominate the IFA marketplace? A:
A:I do not believe that and I do not know of an IFA who has lost a client to a bank. It is quite the opposite. The bigger point is that there are thousands of consumers who do not have access to face-to-face advice. Any development in banking will be good for the intermediary sector because it will provide a nursery for future IFAs who want to build their own businesses.
Q: What is the future for Tenet? A:
A:Our strategy is to continue growing, both organically and by acquisition, and we are actively considering other acquisition opportunities.
TENET started as M&E in 1987 and provides services to 5,500 British IFAs. Four life offices – Aegon, Friends Provident Norwich Union and Standard Life – each bought 20% of the group in 2005. The remainder of the company is owned by its management and other staff. Tenet launched its Clear wrap at the end of 2005.