Advisers have different views of how to profit from market developments. Not all will be the right ones
Spending a couple of days with senior figures from 40 of the country’s top intermediaries has reinforced in my mind the diverse nature of the businesses that fill the corporate advice space.
Canvassing the views of those individuals at the Corporate Adviser Summit in Hampshire last month, whether through electronic polling, questions from the floor in plenary sessions or over a quiet one in the bar, it has become apparent to me that nobody has all the answers.
With so many challenges facing the sector, from the retail distribution review to Personal Accounts, Treating Customers Fairly to employee engagement, it is perhaps not surprising that different businesses are planning such different strategies.
Of course the marketplace is a big and disparate one, with the needs of FTSE100 blue chips quite different to those of SMEs. But what has struck me is the sheer diversity in understanding of what is likely to happen to the market over the next five years. Take what advisers are going to do to meet the opportunity created by the obligation on literally millions of employers to offer contributory pensions for the first time, for example.
Our research carried out at the Summit shows virtually a three way split in advisers’ strategies between targeting all employers, employers with 250-plus employees or high average salaries and not bothering with this market at all. Surely any salesman would want the opportunity of the Government telling virgin clients that they have to buy a product. But as one adviser said on seeing these results, if there are three different ways of proceeding, two thirds of the market must be picking the wrong one.
A similarly disparate approach is apparent in reactions to the retail distribution review. While half of advisers may be looking at fees plus customer agreed remuneration, significant proportions are also looking at fee only, commission only and a mix of all three. Who will win out in the battle for distribution only time will tell, and to be fair, until we know exactly what the sales and regulatory landscape is going to look like in the future, nobody can plan with any certainty. It will be interesting to ask the same questions in 12 months from now.
The last few months have also seen considerable activity in the mergers, demergers and acquisitions department, with providers and private equity all taking an interest in intermediaries. What is apparent is that those who get their business model in the right shape for the coming changes to the market will be attractive to investors. For switched on businesses change will be good.