2010-06-21T08:00:00.000-07:00

Remoulding the model

As the industry counts down to RDR, with all the associated issues regarding compliance, Sterling McCall are at the forefront of developing unique solutions that make the transition smoother, quicker and less costly.

Two years ago the directors decided to review the model of the company comprehensively. Part of the restructuring focused on giving advisers a greater stake in the value they were creating for the business. To do this, Moseley set up a separate company, Sterling McCall Wealth Management (SMWM), as a limited liability partnership.

‘Research showed us that a lot of advisers leave firms because they have no ownership of clients or of the wealth they create. Many feel that the principal doesn’t offer them a part of the business growth. We thought that was wrong. For advisers to want to work for us they needed to own something. We couldn’t do that through the limited company –trying to split off the shares was too complicated. So we launched the LLP.’

The Financial Services Authority gave it permission to create SMWM as an appointed representative of SMAM. This structure has allowed Sterling McCall to rapidly recruit new advisers to the firm.

The LLP now owns all Sterling McCall clients, while the original limited company provides compliance. The three directors share ownership of the LLP 50:50 with their new IFA partners (10 have joined already, with a target of 24 by the end of 2010). The advisers’ share is divided evenly between them as partners in the LLP structure.

‘We also say that, if they want to leave us, they are welcome to take their clients,’ says Moseley.
‘Clients are about relationships. If I’ve never spoken to them, what gives me the right to try and keep them? That’s how the agreements are written. As far as I know, it is unique.’

As part of the review, the directors also decided to create joint venture financial services arms with accountants and solicitors – also as 50:50 shared LLPs. Two joint ventures have been set up already, with more expected to follow.

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The way we invest is about to change...