The power shift from manufacturers of financial products to distributors has always been more in evid...
On the advisory side, strength in numbers is the favoured strategy with the existence of networks such as the European Independent Advisers Network (EIFAN). Such networks have existed in the main to meet the needs of the adviser, with the benefits to providers as a one-stop distribution point still in its infancy.
In the past, major problems have been the fact that international advisers have been driven by commission rather than quality of service. The idea was that clients, particularly expatriates, were only going to be clients for a finite period, so commission-loaded products were favoured over client need. While this has gradually changed over time - with the emergence of a more financially sophisticated, globally-mobile professional - a further problem has been the disparate quality of advisers.
A sea change may, however, be in evidence. Financial consultant Pioneer International, born out of Old Mutual but now 50% owned by its own management and 50% by a private consortium , has 75 advisers located in the Latin American, Middle East and African regions. Pioneer has carved a niche in offering financial consultancy services to high net worth individuals. It has recently raised its profile with the announcement that South African financial services group, ABSA, has taken a stake in the group.
Pioneer has a clear strategy. It aims to offer superior quality financial advice at low cost. Twelve months ago it took a stake in US-based Paragon Asset Management to offer discretionary portfolio services to clients. Unlike the supermarket approach favoured by others, the group is also consciously limiting the number of providers it links up with to distribute funds - an approach which gives Pioneer the upper hand.
Another area that the group hopes to capitalise on is technology. Pioneer has recognised that rather than marginalise advisers, technology puts the adviser in a strong position as it is a major chance to offer added-value. It has developed its own proprietary client administration service that facilitates the collection of data such as investment transactions, insurance cover, portfolio movements, inflows and outflows of cash and current tax liability on screen.
Whether or not other financial consultants can mirror this development remains to be seen, but in the battle between manufacturers and distributors such an approach gives advisers a clear chance to stay one step ahead of clients and two steps ahead of the competition.
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