I was out on the road last week chairing conferences on the development of the wrap and platform market, and learned some valuable lessons about the reality of the adviser business.
Until now, the whole focus of ‘wrap’ talk or its potential growth in the UK market has, in the main, been on the actual tools available, and a huge amount of time seems to have spent on who charges what, and how.
Talk so far appears to be have been driven by the industry telling IFAs the benefits they will get, and in some senses it is being treated as a product in its own right, whereas the lessons from overseas presented within this conference suggest changes in culture and business could see wrap hand the power of financial services back to financial advisers and and allow them to dictate the future of the industry.
It’s a very upbeat and bullish perspective but one which really got my attention. Could the UK financial advice industry really be set on a completely new course to that which wrap players are attempting to manoeuvre everyone into?
The stance essentially arises from developments in the Australian market where the experience there is financial planners – our equivalent of the commission-based IFA – were able to leverage the use of wrap technology and the consolidation of client assets as the power to argue for better terms for their clients and the value of the assets is held.
It’s very much the opposite of the UK market where most financial advisers and planners – traditionally seen as intermediaries between providers and the client – are bound largely by the products firms are willing to offer and the retail pricing structure which fund managers believe they can set.
More importantly, all of the changes were not driven by which platform or technology tool you adopt, but in deciding what the business strategy is, who the firm’s target client base was and the efficiencies of process which allowed advisers to spend most of their time on meeting their clients financial goals. The technology merely aided that by stripping out much of the work of chasing valuations, and knowing exactly what a client has.
It is a major shift in thinking to evolve from what is a product-centric financial services industry to one where the client is at the heart of everything the adviser, the manufacturer and the fund manager does (an argument I’m sure many IFAs would refute).
I heard many presentations last week – all of which were enlightening and offered useful lessons on the implementation of wrap into an IFA business – but what really struck me was the difference between Australia and the UK: everyone talks a good game in the UK but in all the chat around wrap what real benefit will the client get out of it and where is the client focus?
As one of those potential clients, if it’s not clear to me why moving the assets is necessary and what benefit there will be to me in the long run, I don’t see the point in the upheaval of assets. And perhaps that’s where more focus needs to be placed.
Wrap is essentially a back-office tool (not in the traditional back-office technology sense) which will help the financial adviser firm. But the messages coming from the floor of the conference and the presenters is without a clear business direction and message about its benefits to the client, the industry may be jumping the gun and talking about revolution of the market when the priority should be in setting up the business model so any implementation is easy to communicate.
Make sure you keep a close eye on IFAonline this week as all of the lessons revealed at the conference - including the FSA’s true priorities for the development of wrap usage - will be revealed in a series of stories and case studies.IFAonline
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