Having previously run James Hay and IFG Financial Services, Sargisson took to the helm of Yorkshire-based Sandringham in July 2015.
A review of the firm’s entire investment approach over the past year found that it was “no longer correct” to describe its business model as restricted.
Our protection business has been very close to whole-of-market for some time, the firm said.
Sandringham’s fund research is undertaken by its investment committee, supported by Rayner Spencer Mills Research, which provides governance and oversight.
At present, the firm offers access to 13 fund styles, 61 portfolios and funds across nine managers.
Why go restricted in the first place?
The company’s decision to embrace the post-RDR restricted model was predominately driven by two factors, Sargisson believes as he was not there at the time.
The first, to which he doesn’t ascribe much credibility, is the belief that RDR would “lead advisers to want to go restricted”.
“For my purpose, I never saw the correlation. I never saw RDR as propelling advisers into the restricted space.
“If you look at the stats, around 85% of the UK retail market is badged as independent. Something like 13% has gone down the restricted route and then there is a 2% segment that is kind of a hybrid.”
For Sargisson, the prevailing reason the firm opted to become restricted was risk management. “I really do buy into that.”
Risk management
In his previous role at James Hay, which he ran until 2013, Sargisson was often confronted with, and disappointed in, advisers who “lacked rigour when it came selecting investments”.
“The reason behind selecting investments was almost abstract. There was no real due diligence.”
In 2010, Sargisson said there was an “explosion” of Ucis-type products “as advisers looked for an investment that would outperform the market at a time when we’d had the financial crash”.
“Heads were being turned by all manner of fancy, esoteric stuff. James Hay had a really robust due diligence department and we would knock a lot of this stuff back. Only for the advisers to come back and criticise the decision, which was quite eye-opening for me.”
It was Sandringham’s approach to risk management that attracted Sargisson.
“When it came to taking over the running of Sandringham, the thing I really liked about it was the fact it was very strict about managing the risk and getting advisers to come on board who really didn’t want to have all the responsibility of picking funds, managing portfolios.”
The restricted model ran for around five years from 2012, “but over that time it has evolved” Sargisson told IA.
He refutes the idea that the change was driven by a failure to provide a restricted proposition, citing the firm’s 48% increase in gross profits in 2017.
Adviser recruitment
Part of the challenge in growing the business, however, was the ‘restricted label’, he admits.
“The real pressure came on the recruitment side because we have a target of 250 advisers and then we will start looking at an AIM listing once we’ve got the right people on board.”
The firm currently has around 160 partners, who have an equity stake in the business, and wants to meet the 250 target by the end of 2018.
Sandringham has seen a significant amount of churn over the past two years, which saw turnover of 90%.
“We’ve lost about 50 partners who didn’t really exhibit the right qualities and the 80 that we’ve recruited are very much in that space.”
He added: “What I consider to be a ‘right partner’ is an aspirational partner – someone who sees Sandringham supporting and growing his business. That’s our mission statement – it’s about supporting partners to deliver profitable, proficient, future-proof business.
“The future proofing is the risk management that we do in Sandringham.”
