Prudential has become the latest provider to follow the St James's Place (SJP) model in a bid to secure a larger share of the advice market with the launch of a self-employed adviser business.
The new business will see advisers set up their own businesses within a restricted proposition, a model that sounds similar to SJP's partnership proposition.
'The majority of SJP partners are also self-employed, they also have a practice buyout model available to them, they are restricted, regulated under the SJP group, so yes there are some similarities. But there are nuances, and the restrictions are different and the set up is different,' he said.
Prudential is not the first business to follow the SJP model. In October last year Mattioli Woods announced plans for a proposition it described as 'SJP with a twist'. Sanlam also recently launched a partnership advice model, while Lloyds has teamed up with Schroders to challenge SJP.
However SJP has warned rivals in the past about the difficulties of emulating its success. Following the launch of Standard Life's restricted advice business 1825 in 2015 SJP managing director Ian Gascoigne said other companies would need 'good luck' to make their propositions work.
New Man from the Pru
Hegarty is expected to start at Pru's new venture at the end of March after leaving SimplyBiz's New Model Business Academy. He said Pru's history attracted him to the new role.
‘Everyone will remember “the Man from the Pru”, I think in a positive light, which is something for me that is really important from the reputational point of view, and from the point of view of customer proposition and customer trust.
‘Prudential has a fantastic reputation in the market, it’s got a market-leading product range, so I do see this as being a really strong proposition to help meet the advice gap and cater to some of the consumers who struggle to find advice at the moment.’
Initially, 30 of Prudential's current 360 employed advisers who have aspirations to grow their businesses will be invited to move over to the self-employed format. But Hegarty (pictured above) said it is likely IFAs from outside the Prudential group will be able to join the self-employed model in the long run.
To begin with, the focus will be on individual advisers rather than creating large businesses within the model.
'This is probably where there would be a slight difference to the network model,' Hegarty said.
'Networks like Intrinsic or Tenet will have a principal authority at the network level and a host of firms under it, where as the likelihood is that this will be individual advisers to start with, and then hopefully we’ll develop that over time to accommodate actual firms within that model.’
Advisers will use a restricted panel when recommending clients, although Hegarty said this could change in the future.
‘It’s a restricted advice proposition mainly using the Prudential product range for investment and retirement, with a nearly whole-of-market product for the protection and annuities business. The new self-employed proposition will mirror that of the employed model for the time being, but that may change depending on what we view as the opportunities going forward.'