The networks struck a joint deal to provide mortgage and wealth services for firms joining Stonebridge from Legal and General following L and G’s decision to deal only with Directly Authorised (DA) firms.
Collaborations of this kind are uncommon but competition between networks for new members may mean pushing the boundaries of service to catch the eye of intermediaries.
This week we have asked our panel of distribution experts to examine the deal and assess whether this is the shape of things to come.
David Copland, director of TMA, does not think it will spark a wave of copycat deals.
Lauren Bagley, head of marketing at The Right Mortgage and Protection Network, views the move as putting the needs of the adviser firm first which should not be considered as a new approach.
Richard Adams, managing director of Stonebridge Group, explains why the deal was put together but says defensive attitudes in the distribution sector may hold back other networks from forming alliances.
Stonebridge is trying to solve an issue that I wrestled with when I was running Pink Home Loans, how to attract to my network quality wealth management firms that also write mortgage business. Rather than set up and recruit a new team to build this business we looked at the prospect of a dual principle network but decided not to pursue this any further. So hats off to Stonebridge for launching a solution.
However, I believe that these two markets are even more polarised than they were a few years ago as there are few brokers who have the expertise to deal with both of these elements. I do not think that this will be something that starts a trend. Most likely Stonebridge is trying to pick up business from the changes at both L and G and Sesame.
If the customer journey isn’t spot on, however, it could well be confusing to the customer. For example, is it two businesses? Are there two business cards? Will there be different IDDs?
That is not to say that it is not good to create partnerships that offer added value to advisers. At TMA we are happy to team up on a DA basis and offer the power of our lender relationships to other non-competing organisations. TMA club has a number of partnerships with both IFA networks and large IFA firms who outsource their mortgage panel management to specialists like us as we deal with these elements all of the time and we are always looking to create new collaborations of this sort.
It is to this end that we feel that a bespoke service is more effective than diversifying too widely.
The new distribution deal with Tenet is a really interesting solution and Stonebridge are absolutely right to establish this new relationship if that’s what their members have asked for. The network has the benefit of being independently owned, similar to The Right Mortgage and Protection Network, therefore it has the flexibility to listen, change and adapt at a relatively fast pace.
This is where a bespoke or tailored approach for advisers may not be as easy for corporately owned networks, as they battle between internal ‘red tape’ and the broader implications of reacting to what ARs truly want and need, potentially creating conflict of interest.
Creating a customer-focused culture is critical. As networks have grown and become more established, it seems their focus has been on developing products or propositions and the processes that support them; rather than the people who interact with or make decisions on behalf of advisers on a day-to-day basis.
In summary, providing AR firms and advisers with what they want and need should not be a ‘new approach’; the right culture of putting members and their customers first should be instilled in all networks and at every level if they want to continue to be successful.
To my mind, this arrangement with the AR firms, Stonebridge and Tenet is all about offering the right services, compliance and ongoing business development to those firms who want to be part of Stonebridge Group but may have other advisory interests and needs.
In this case, securing that tie-up was quite complex but at least there was no potential for overlap. We are not active in wealth management therefore it made sense to form the Chrysalis Wealth Management brand which would be part of Tenet for this activity. However, advisers within the two firms (Crystal Clear and i2i) conducting mortgage and protection business would be under our umbrella.
There’s no potential for a crossover here or confusion and therefore the collaborative approach we were able to follow works extremely well. I would like to think that different networks would be able to work together in such a way going forward but I’m also conscious that some propositions see all other networks as the ‘enemy’ and it would be an ‘all or nothing’ approach.
Luckily, that wasn’t the view of Tenet and it’s this type of forward-thinking which is going to secure the future of the network model because, let’s be frank, it is becoming increasingly difficult to be all things to all men. This is why we don’t cover wealth management – it’s not our specialism and it’s not a route we wish to go down.
There will be other sectors where we have a similar view and, should our AR firms want to branch out into these advice areas or come to us already offering these services, then we would undoubtedly look for a solution that suits all parties as we’ve done here.
Don’t get me wrong, our focus is on growing Stonebridge and developing our offering to our AR firms however, given the changing nature of the profession, we also need to be flexible and willing to shape our proposition to suit. In that sense, I doubt this will be the last such arrangement of this nature that we put in place.