Openwork unveils three tier structure to get RDR-ready

Openwork is to offer advisers the choice of three business models – including a broadened multi-tie proposition - as part of a three-year strategy to help them adapt to RDR requirements.

The move follows a major review conducted with the network’s partners, principals and advisers in Q4 2009.

It will see Openwork offer appointed representatives the choice of a single-tied model, a multi-panel multi-tie model, or a whole of market IFA model.

Openwork CEO Martin Davis says the restricted advice stream will form the bulk of the network’s business and it intends to 'dominate' the restricted market post 2012.

However, the network is keen to offer a range of options for current and potential members.  

Davis says: “We want to offer advisers the choice so even if they are not sure if they will be restricted post-RDR, they can join us as whole of market and might even move to be restricted later.”

The multi-panel multi-tie model will be a bolstered version of Openwork’s current ‘best of breed’ multi-tie proposition.

It will allow advisers to offer pension, protection and investment products from a broad panel, rather than the two preferred providers currently available.

Davis says expanding the multi-tie proposition will allow advisers greater choice. It should also help its firms attract more advisers who may not be comfortable with a single-tied proposition, but would be happier with a restricted panel of perhaps 3-4 providers. 

Meanwhile, the whole of market IFA model is expected to be developed through acquisition in 2010. This could be the purchase of a firm or buying in the technology and systems to build up this part of the business.

Openwork's model will feature a wrap-based wealth management option. Again, Openwork will not build this proposition themselves and will start to do due diligence on external platform providers this year.

Although not traditionally known for its whole of market offering, Davis believes Openwork has a strong proposition for this market.

Davis says: “Whole of market IFAs should look at what they offer clients. Why should they have to shoulder the costs when they only offer a choice of a few products and they could be rewarded for sticking to a smaller number? With some networks in trouble, advisers also need to look at the financial strength of their providers and we are well capitalised, profitable and have cash reserves.”

Finally, the single-tie model will remain broadly the same as the existing structure with a large number of Openwork's advisers keen to continue operating under this model.

The RDR strategy will be rolled-out in full in 2011. The initial stages will involve a re-design of the organisation, which last week saw the departures of governance director Michael Burne and development director Gerard Moore. Sales and marketing director Andy Ferns is to assume a special projects role overseeing the IFA programme. Further staff will also be recruited to help with the restructure.

Openwork believes it should not need to raise extra capital to fund the restructure as it can rely on profits and its cash reserves. However, this may change as possible acquisition plans become more advanced.

Its mortgage proposition, a two tier panel of over 30 lenders, will remain the same following the restructure of the rest of the business.

The Openwork Group is owned via ordinary shares by its advisers with a 67.5% share, 7.5% by its employees and 25% by Zurich Financial Services Group.