22 December 2004 Shares Magazine by Jonas Crosland

Times are changing. The FSA has spread its wings and is now flexing its regulatory muscle over the mortgage and insurance sectors. The most immediate implication is one layer of control and another of transparency and accountability. For many high street IFA's who up until now have given good advice, the future is bleak. Indemnity insurance costs have gone through the roof as a result of recent scandals associated with the alleged mis-selling of pensions, savings and mortgage-related products. Many IFA's have given up altogether, while others face the prospect of disappearing as senior partners and one-man bands hang up their boots.

Enter Broker Network Holdings, with a clever but simple game plan. The idea is to provide a layer of support between IFAs and the major suppliers of financial products. The big names prefer to deal with a networked broker rather than the thousands of small IFA's, while the latter are happy because any product requirement is just a phone call away.

By acting as a go-between, Broker Network satisfies both sides and takes a commission on the way. The group is proactive and places its own staff into partnerships where the partners may be retiring but the customer base remains.

Given the fact that the FSA's expanded remit effectively shuts down any IFA unable to meet the increased cost of compleance there is an understandable interest to join up to Broker Network's umbrella of services.

The group is modest in size but right in at the start of an expanding market. Floated on AIM in May 2004 at 71p, the shares have all but doubled already and turnover in the six months to October climbed by 75%. Pre-tax profits over the same period climbed by 68%. Member groups at the end of the half year stood at 138 and there are a further six firms contracted to join before February plus another six at an advanced stage of discussion. The attraction for more companies to join up is expected to increase as compliance-related issues impose greater working pressures. With cash in hand of 3.1m at the end of October and a positive cashflow, the group looks good.

SHARES SUMMARY

The combination of providing an umbrella of services together with actively taking over IFA's could at some stage be complemented by establishing greenfield outlets. With around 26,000 independent IFA's the potential is considerable.

Hello Legend i did say i would buy into these a couple of weeks ago but didn`t have the funds.Now that i have i might jump in tommorrow and buy a 1,000 so keep an eye out for little old me on the trades tommorrow.
The results are due soon and i expect you still hold these in high regard given your share holding.Roll on tommorrow and then the results!
db66

I will do sir... I hope you will be pleasantly surprised ;-) I would expect an rns around the beginning of july confirming another acquisition, then BIG buying interest thereafter.... watch this space!!!

Plenty of buying today...