How Network Direct uses technology

This week, Mark Loosmore of AT8 Group examines start-up Network Direct’s use of the Plum practice management system.

The last few years has seen the closure of several networks (especially in the mortgage market) and the acquisition of others. As a result, I was pleased to have the opportunity to visit Network Direct, a recent start-up that seems to be bucking the trend.

Network Direct was formed in 2009 by ex Thinc and Lifeboat directors Brian George, Ron Skinner and Bill Wynn. We met with George and he articulated a clear positioning for his new network.

“Most networks have grown too big,” he explained.

“Networks used to be about like-minded professionals coming together to support each other – somewhere along the way the industry lost that sense of purpose.”

A sense of community

Network Direct was launched to try and recreate that ‘community approach’ and has deliberately limited its ambitions in terms of size in order to ensure personal service and support is delivered. Currently it has 10 firms in the network, but with a strong pipeline it is hoping to reach its optimum size of 50 firms within a year.

As well as the personal service, George is differentiating the network proposition by offering a fixed fee, worked out by the number of advisers as opposed to turnover.
The fee structure, he believes, will give the member firm greater clarity of costs while also providing a predictable and reliable revenue stream for the network.

The revenue could of course still decline if the member firms fail to transition successfully to a post-RDR world and to avoid this issue Network Direct undertakes a business health-check of any firm that wants to join.

The health-check is not dissimilar to a compliance visit and covers systems and processes, finances, file check and an assessment of the fitness and probity of the management/owners.

With a predictable revenue stream, if costs are managed effectively, then a sustainable business model is created. You get a sense of this cost control from the offices; they are rented from within the Redditch Business Centre and are functional, and are clearly a cost effective and flexible option.

Plum role

Technology has also been deployed to help keep costs under control. Central to the Network Direct proposition is the Plum system. Plum is a traditional practice management system used by about 2,000 advisers in the UK.

It is functional but has never had the marketing power to compete with the likes of Adviser Office or Intelligent Office. The system itself is credible and proven over a number of years while the company has a reputation for speedy response and personal service to address client issues.

Plum previously only had a system suitable for individual member firms and not a network, so George has worked closely with the team at Plum to create a new network-centric system. As this work comes to fruition he is still extremely positive about the experience and rates very highly the service he got from Plum.

Each member firm has a standard copy of Plum (the first copy of which Network Direct provides free to the firm, while each subsequent copy is purchased at a discounted rate) while the network has an ‘umbrella’ application that makes all the data available for compliance checking and to provide management information.