From the point of view of Distributors, they are going to have to explain what ‘value’ the cost of their advice will deliver. Commission has provided a useful smoke screen for some who would probably be exposed as ‘product salesmen’ rather than Financial Advisers. More people are looking at their business models and are slowly but surely trying to transition to the ‘New Model’ with greater focus on fees.
In a post RDIP world, the costs of delivering the advice and service will more be exposed to transparency and competitive pressure, so who does what in the sales process will need to be carefully considered and assessed for value.
The principle of ‘smarter, not harder’ is going to have to be applied when looking at how advice is delivered. The idea that a customer will be willing to pay a premium rate for an adviser to sit at their house filling in basic factfind data is going to be challenged. Could, or should this be done by a Para-planner remotely or could the client log onto a system and complete part of the data themselves. I accept that some, will and some won’t, but as more pressure comes to reduce the costs of advice, options and choices will need to be made. There is going to be greater focus on the elements of interaction that require the skill – and cost – of the adviser. Accordingly, a cost effective division of labour across the sales process will need to be applied.
More businesses will look to use technology to improve the data capture process. There are an increasing array of planning and analytical tools available either as part of ‘holistic’ packages, or as stand-alone applications. Add to this, a growing pressure for using electronic new business applications as well as more effective use of segmentation and CRM, all supported by robust back-office admin and servicing software. In addition, we have a growing number of Platforms (Wrap or Supermarket) and it is clear that the future of advisory practices will no longer be based on using the ‘quill pen’. Sure, there will be those who will say that technology gets in the way and so argue for the continued use of paper, but the reality is that the world has and is moving on. Consumers of all classes, demographics and cultures are already using ‘e’ as the way that they communicate and purchase – those in the industry that don’t modernise will not survive.
Companies are often so focused on doing what they do now, that they can miss the need and opportunity to re-examine what they could do differently. This is not just about creating an electronic means of doing what they do on paper, it is an opportunity to fundamentally rethink their approach and benefit from ‘step change’ or from ‘aggregated’ incremental improvement. Look at what Apple, Google and even British Cycling have done by adopting a policy of using people within and outside their organisations to challenge current thinking – ‘think the unthinkable and do the impossible’ are worthy challenges for all businesses. However, beware of the very strong and articulate group that use the ‘can’t’ word as a means of avoiding change. Technology can be used by some people as constraint – if you let it. However, if embraced constructively, it is also the most likely means of enabling positive change, but it can be too easy to put off until tomorrow what should be done today!
