For about a year now, I’ve been harbouring a guilty secret – last July, one of my co-directors (the grumpy one) acquired a new 3G iPhone – I knew I was locked into my contract with alternative supplier for another year and unable to upgrade – I was extremely envious, bordering on dribbling with jealousy. I had to wait.

So, a year passed and I waited patiently (NOT!) and earlier in June, Apple announced the revised, bigger, better iPhone the 3GS. It was time to pounce.

So, my shiny new handset arrived just after launch, courtesy of O₂ the sole supplier in the UK – I decided to go for a white one (I didn’t actually, it was sent in error but I couldn’t be bothered to change it) and it was the 16Gb version – I felt I couldn’t justify the larger 32Gb. It worked straight out of the box, after I had registered it via iTunes – the Apple application used for synchronising, backing-up and moving media to the device.

I have read several stories about the iPhones relevance in the corporate market – some very critical pieces, with CIO’s recounting doom and gloom, corporate security leaks, excessive consumer desirability, too many non-business functions and alike. From our perspective, a smaller business as we are, the functions offered are second to none – we use an outsourced Microsoft Exchange email service – the iPhone connects seamlessly to it and can receive ‘push’ email, ie near instantaneous delivery, to the handset – calendar, contacts and notes are all synchronised across all the machines I use, PC, iPhone etc. Yes, I did have this on my previous ‘phone, which was a Windows Mobile device, but the difference in the user experience is amazing. I can remotely wipe the device if lost or stolen and using the Apple MobileMe service, can send a message to the handset and locate it using Google Maps – very clever.

I have Google Maps, which orientate themselves correctly using the inbuilt digital compass, together with navigation etc. With the new version of the iPhone, I can link the device to my laptop and use the iPhone modem – this is called tethering and removes the need to have a separate 3G ‘dongle’ to connect when away from the office or Wi-Fi access point.

So what are my first impressions:

The device looks the bees knees – the screen surface is better and resists grease and fingerprints
It’s quick – all the function operate swiftly, with no delay
Email operates beautifully and web-browsing is very easy and clear
The extra applications that you can get, a lot of them free, really enhance the machine – I’ve got a spirit level and a torch – essential financial services items!

What is interesting is how a device like this can change the habits of both consumer and service provider. I read recently in thinkbroadband.com that 40% of all mobile web traffic comes from the Apple iPhone according to mobile advertising firm, AdMob, who collated worldwide statistics. The latest report weighs up estimated handset sales based on Gartner’s 2008 report and found that whilst only 8% of smart phones sold were iPhones, they made up for 43% of mobile web traffic in April 2009. That really does change the commercial model of the mobile ‘phone companies and moves away from just the provision of voice services.

For those who already have made the jump, the new iPhone might not appear to be much of a revolution – it is more of an evolution, but for me having just acquired the new model, it’s one of the best pieces of new technology I’ve had the pleasure to possess for a very long time – covet, over!

Whilst we are still awaiting the publication of the FSA Consultation Paper for how the implications of RDR (now RDIP) will be implemented, we touched on the subject of fees last week and so we thought it was worth looking at the ‘Guided Sales’ opportunity. Guided Sales is being debated and tested by a number of financial services industry companies – including providers, distributors and technology suppliers. Those that have followed the ‘pendulum’ movements in what RDR proposed, will no doubt be interested in how the next chapter of this story unfolds.

The April 2008 ‘interim’ statement seemed to offer a simple ‘non-advised’ – decision tree – route for consumers to purchase products that couldn’t or wouldn’t pay fees. There was and still is a legitimate concern that the effect of ‘Adviser Charging’ could lead to a ‘financial underclass’ and this would not be politically or socially acceptable. However, by November’s Feedback Statement, there had been some degree of ‘backtracking’ and the FSA was keen to encourage the ‘Guided Sales – Advised’ route, which was felt to be less exposed to potential ‘miss-selling complaints’. Even so, whilst this potentially low cost route to market is still attractive, the opportunity still has a number of hurdles to overcome:

• Can systems and processes be designed that will offer an attractive, easy to understand means for the mass consumer market to engage?
• Can distributors deliver these services in a cost effective manner?
• Can the FSA and FOS collaborate in agreeing a clear set of guidance that protects the consumer and helps to minimise the risk of damaging complaints?

On the first bullet point, the technology companies and a number of distributors are working closely with consumer research groups as well as the FSA, FOS and ABI. Supportive research has been obtained, albeit that this risks being directed to supporting the desired outcome of those who commission it. In addition, innovative and creative design teams look to be coming up with some positive ideas that could positively engage the consumer.

On the second bullet, I think that it is too early to say if this channel could be ‘cost effective’. Much will depend on the degree and volume of consumer interest and fulfilment. However, there is a real motivation to address the problem and whilst there will be those that criticise the potential limitations of this ‘cheaper’ channel, we should be looking at the positive benefits for the whole industry in encouraging mass consumer engagement. Indeed, whilst the products and services may be fairly basic, not everyone can afford a Jaguar. So the analogy of using a Tata Nano (cheap car) to get from A to B may better than nothing if that is all that the consumer can afford. Indeed, they may in time be able to ‘upgrade’ the product, or ‘trade-up’ to a better vehicle.

The third bullet point requires all parties to be open minded and pragmatic in identifying areas of risk in the systems and processes that are being designed. They then need to work positively together to remove or reduce these in a clear and consistent way that also avoids the application of ‘retrospective hindsight’ being used to create another damaging wave of ‘misselling claims. This truly is in all parties interests. Whilst it may not be possible for the FOS to offer ‘safe harbour’ security over the application of FSA regulations and guidance, they must not simply ‘sit on the sidelines’. Having read the response of the FOS to the RDR Feedback statement (Nov 2008), I believe that their approach has been encouraging, though this needs to feed through to proactive action and support (see FOS link here ). Will the industry and regulators rise to the challenge or will they be too frightened of failure to invest the effort in finding a workable solution. Remember that immunising yourself against risk usually means you immunise against the benefits of getting a return.

Despite the current ‘doom and gloom’ being put around by some, it has been fascinating and refreshing to have had conversations with a couple of IFA businesses that have recently moved to 100% fee based models – both conversations were quite inspiring.

The two stories were remarkably similar and neither moved to fees to pre-empt RDR, in fact RDR was almost irrelevant to their decision. Both believed passionately that fee based services were the way forward for the benefit of their customers and their own businesses. They had taken a little time to establish exactly how to achieve this, but once they had invested time to indentify and clearly articulate their business proposition, they hit the streets with their new models and haven’t looked backwards since.

That makes the transition sound easier than it undoubtedly was. For one of the IFA firms, they started with a client bank of 4,500 and found only 10 of those would transition to a fee based model. How scary is that? The client bank that they had grown and nurtured for 10 years was effectively going to have to be rebuilt – virtually from scratch! However, they did it and at the end of year one of operating their new model they had grown revenue by 85%!

With RDR coming around, you may think these companies are sitting there looking pretty smug – ready for the changes. However, regulatory change was never the key driver in the first place – good customer service and keeping ahead of the game was the motivation and these firms are now looking at what to do next to stay at the forefront of the market with a service based value proposition.

Neither of these firms is large, they are not owned by large product providers, or heavily capitalised. However, as with many IFAs, these companies are resilient, resourceful, focused and driven. As a result, they will undoubtedly survive the difficult conditions the financial services market is currently facing. A fear of failure is causing some to bury their head in the sand and hope these issues will go away. Those facing a similar dilemma should not be afraid to ask for help and as these companies have shown, it is not only possible, it has proven to be more beneficial than trying to maintain the status quo.