Should You Be Concerned About Who Owns Your Network?

Ownership across the financial advice and network market continues to change.

Acquisitions, private equity investment, consolidation and changes in strategic ownership have become an increasingly familiar part of the landscape.

For advisers and firms operating within a network, that can understandably raise questions.

Should you be concerned about who owns your network?

Not necessarily.

A change of ownership can bring investment, additional resources, better technology and new opportunities. But understanding who owns the business, why they own it and what they are trying to achieve can provide useful context about where your network may be heading.

Ownership isn’t necessarily good or bad

There can sometimes be a tendency to regard a change of ownership as either automatically positive or a reason for concern.

I don’t think either assumption is particularly helpful.

New investment can give a network greater capacity to invest in technology, compliance, recruitment, adviser support and infrastructure. Being part of a larger group may also create opportunities that weren’t previously available.

Equally, an acquisition is normally made for a reason.

The new owner may want to grow the network substantially, improve profitability, acquire further businesses, combine services across a group or ultimately realise the value of its investment at some point in the future.

None of those objectives is necessarily a problem.

But they can help you understand the likely direction of travel.

What could change?

A change in ownership doesn’t mean everything changes overnight.

In many cases, the network may continue operating under the same brand, with the same management and broadly the same proposition.

Over time, however, ownership can potentially influence areas such as:

• investment in technology and infrastructure;
• management and strategic direction;
• appetite for growth and recruitment;
• the types of firms the network wants to attract;
• charging structures;
• compliance and operational processes;
• product and provider relationships;
• the range of services offered to advisers; and
• longer-term acquisition or consolidation plans.

Some of those changes could be very positive.

The important thing is to understand what they might mean for your particular business.

Look beyond the network as it is today

When comparing networks, advisers naturally tend to focus on the current proposition.

What does it cost?

What technology does it provide?

What support will I receive?

What is the compliance approach?

Those are all important questions.

But if you’re planning to build your business within a network for the next five, ten or even fifteen years, there is another question worth considering:

Where is this network likely to be heading?

Ownership can sometimes provide clues.

Who ultimately controls the business? What else do they own? What is their track record? Are they investing for long-term growth? Are further acquisitions likely? Is the network part of a wider strategy?

You won’t always be able to answer every question, and plans can change.

But understanding the bigger picture can be just as useful as understanding today’s proposition.

What happens when two networks come under common ownership?

This is becoming an increasingly relevant question as consolidation continues.

Common ownership doesn’t necessarily mean two networks will become one.

They may retain separate brands, propositions, management teams and target markets.

There may be very good commercial reasons for doing so.

But advisers may reasonably want to understand the longer-term strategy.

Will systems eventually be shared?

Could propositions become more closely aligned?

Will there be greater purchasing power or investment?

Could the networks continue targeting different parts of the market?

Or could further integration happen over time?

There isn’t necessarily a right or wrong answer.

The point is simply that ownership gives you another piece of information when considering the future direction of the business you’re partnering with.

Your business may change too

There’s another side to this.

It isn’t only networks that change.

An adviser may join a network as a single-adviser mortgage business and several years later employ staff, have multiple advisers, write significantly more protection business or move into other areas of financial advice.

The network that was appropriate at the beginning may still be exactly right.

But it may not be.

That doesn’t mean you should continually look for reasons to move. Changing network can be disruptive and shouldn’t, in my view, be undertaken lightly.

But significant changes, whether within your own business or within the network, can provide a sensible opportunity to reassess the relationship.

A reason to reassess, not necessarily a reason to leave

If your network changes ownership, I wouldn’t automatically ask:

“Should I move?”

I’d probably start with:

“Does this change anything for my business?”

If the answer is no, there may be absolutely no reason to do anything.

If the new ownership brings greater investment, improved technology or additional support, the change may ultimately strengthen the proposition.

But if the strategic direction begins to move away from what your business needs, it’s reasonable to understand what alternatives exist.

The same applies whether the change involves ownership, management, charging, service or proposition.

Ask where you’re heading and where they’re heading

I’ve said before that I don’t believe there is one “best network”.

A network can be an excellent proposition and still not be the right proposition for every adviser.

Ownership should be viewed in much the same way.

The question isn’t whether private equity, corporate ownership, independent ownership or being part of a larger financial services group is inherently better.

The more useful questions are:

Where do I want my business to go?

Where does my network appear to be going?

And are those two directions still compatible?

If they are, ownership may be little more than background information.

If they’re beginning to diverge, it may be worth understanding your options.

If changes within your existing network have prompted you to reassess whether the proposition still fits your business and longer-term plans, I’m always happy to have an initial confidential conversation. Network Consulting works independently with mortgage and wealth advisers and firms to help them understand the network market and assess the options most appropriate for their individual circumstances.