While 2006 saw the industry finally begin to face up to the realities of life, says Dave Ferguson of Nucleus Financial Group, 2007 will be all about delivery
So here we are again - déjà vu time. It's that time of year. Fairy lights on Princes Street, evenings closing in, Hibs out of the race for the Scottish Premier League and the UK financial services industry stumbling along like a drunk from an early Christmas party. Ahhhh - time to reflect on 2006 and cast a few thoughts toward 2007.
Starting with the year about to pass, it has been fascinating to watch the UK life and pensions sector responding to the various regulatory and market initiatives that have left the industry more battered than ever before. That said, it is probably now facing up to the future with more realism than for some time and I certainly expect a leaner, more efficient sector to emerge.
From Ned Cazalet's insightful Polly Put the Kettle On treatise highlighting the financial risks associated with churning business, through Standard Life's successful floatation and into the current debate about the merits of the industry's distribution and commission models, I cannot help but think 2006 has been the year the industry at large finally began properly to face up to the realities of life.
Perhaps fuelling this period of more grown-up thinking was the slow and ultimately quiet demise of the Millfield/BBB adventure - a shame for those involved but hopefully containing some salutary lessons for us all.
A more sober note has been sounded by the ongoing lack of financial inclusion for the less affluent parts of society. If one insurer seems to have its head around this issue it is Aegon UK, where chief executive Otto Thoresen seems genuinely willing to engage the issue in the hope of finding at least partial resolution.
But, I hear you thinking, five paragraphs gone and not a mention of wrap yet? On a personal level, this has been a remarkable year. After a long period of hypothesising, developing a business model and then raising funding, I will always remember 2006 as being the year the Nucleus journey finally got under way and started to establish its position in the market.
Those of you who have followed this journey will recall we announced our plans for an IFA-led wrap proposition in late June with the intention of moving control of the retail market from the heavyweight legacy providers into the quality end of the adviser market.
So far the response from the market has been magnificent, both in terms of numbers and enthusiasm - now 2007 is all about delivery. Aside from the excellent Transact, this will also be the watchword for so many other providers next year.
At a broader level, it is pretty clear the jostling for positioning in the wrap market is now over and the battle lines have been drawn. In the final analysis, UK wrap providers are either adviser-driven or provider-driven. The former is clearly focused entirely on the client proposition while the latter is likely to be distracted by a need to protect legacy assets. I sense the adviser market will come to repolarise along these lines rather than along the previously artificial regulatory agenda.
I sincerely hope transparency comes to the fore and becomes the key area for discussion. For the sector to prosper it is not appropriate to hide behind old deals and backhanders. That is the model of the past and cannot be the way of today.
I look forward to the New Year with great optimism, hoping to see Nucleus end it as a serious market participant and keeping my fingers crossed for a continuation of the more mature debate we've seen over the last year.
So if you're sitting down on Boxing Day nursing a hangover and wondering if you've overdone the mince pies, cheer up because the future's bright. Hopefully it will be Nucleus orange bright but, even if it's not as stark as that, I sense a new maturity emerging in the sector and suspect we are finally close to putting the dark days behind us. Let us just hope we won't be having exactly the same conversation again this time next year.
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