2018 marks my 30th year in the financial services industry. I thought it might be fun to pen some reflections on my time, consider what the future might look like – and share a dodgy playlist.
As they say ‘pop pickers, in at number 10…’
10. The Financial Advisers’ anthem – I will survive (Gloria Gaynor). Over the years numerous events were predicted to cause the demise of the financial adviser community. Depolarisation, introduction of the bancassurers, various flavours of increased disclosure including RDR, MiFID II and now perhaps the latest challenge in the shape of ‘Robo’ advice. However, in my experience financial advisers are resilient, adaptable, and flexible and always bounce back. Despite the potential challenge of the robots and other technology, I firmly believe whilst some of the delivery mechanisms might change that good quality financial advice will continue to survive for many years.
9. Consolidation – Another one bites the dust (Queen). Whilst advisers are a resilient bunch, like me the majority are not getting any younger. Succession planning or managing an exit strategy is one of the key challenges faced by many. When I first helped advisers transition their business models away from one based on ‘up front’ income and product sales to an assets under advice service based model, potential multiples of up to 5X income were quoted as sale values. Many advisers have undoubtedly built good quality businesses but current valuations are now more realistic and acquirers are necessary.
It looks like the appearance and rise of the consolidators in various guises is set to continue with business valuations being based on robust business models, loyal clients and staff, rather than simply the potential recurring income.
8. Changes (David Bowie). The industry has seen significant change in the last 30 years and perhaps, for me, the most significant (professionally and personally) was the introduction of platforms. Being asked to help launch Standard Life Wrap in 2006 with a very young FNZ business who were new to the UK was one of the greatest opportunities I was offered in my career. My badge to celebrate the first £1 billion on the platform is hidden away safely (along with the ‘Keep Standard life Mutual’ one!).
We are now starting to see the anticipated consolidation in the platform market but also more niche offerings coming to market designed to assist advisers with specific client segments. I think that this activity will continue but we still haven’t cracked the integration with back office systems or how to harness the technology to support the intergenerational transfer of wealth to millennials who want to engage differently and only when there is an advice need.
7. Regulation – Everybody wants to rule the world (Tears for Fears). The FCA rules! And so did the FSA, IMRO, PIA, PRA, Lautro, Rolac, SIB. I’m sure that there are more but bottom line is that we work in a highly regulated industry because we are responsible for the safe investment and management of the customer’s hard earned cash.
6. Work life balance – Always on my mind (Pet Shop boys). As the mother of two boys, work/life balance has always been a challenge.
Guys, I’m sorry I wasn’t there all the time but I tried to get to every sports day, concert, parents night and hopefully all the other important times. As the mother of two amazing young adults, I could not be more proud of you and as per the song title you were….
5. Girl Power – Wannabe (Spice Girls). The opportunities for women in financial services has never been better and has changed hugely during the last 30 years! Significant progress has been made since my early experience of being informed by a sales manager that he didn’t’ approve of women wearing trousers.
Whilst I am a massive supporter of women in the industry, I have had the opportunity to work with many supportive men who at times have counselled, coached, guided and even given me work! Thank You!!
Diversity is hugely important but I also want to be given a role because I’m the right person for the job and not because a quota needs to be achieved.
4. Pensions freedom – Freedom (George Michael). Pensions legislation has continually changed over the last 30 years from when ‘contracting out’ of the second state pension kept us all busy when the rules extended to DC schemes with a government ‘inducement’ of an additional 2% of earning being paid into a personal pension for the first 5 years.
Successive governments have continued to tinker with pension legislation leading up the shake-up in 2015 when it was announced that customers would no longer be required to buy an annuity and could take their pension pot from age 55. Customers have been quick to take up the option and in less than 2 years, £9.2bn payments have been made from UK pension pots. The industry worried about customers buying Lamborghinis, how to design new products, the management of longevity risk and ‘pound cost ravaging’, but a key concern must be that the regulator estimates that 50,000 customers are exclusively holding cash in flexible drawdown and 1 in 3 non advised drawdown clients are entirely invested in cash experiencing no growth with inflation and charges eroding their pots. Now, more than ever before do many customers require good quality financial advice and quite simply, many clients still want a guaranteed income in retirement – an annuity??
This is all yet to play out but with current market volatility there will certainly be some difficult conversations with clients, ‘ambulance chasers’ for DB transfer but the ongoing challenge of the demographics of an aging population won’t change.
3. Technology Developments – Video killed the radio star (The Buggles). Technology has revolutionised our industry in the last 30 years. Highlights for me were projects where we introduced email, moved from dumb terminals to PCs, implemented image and workflow technology and stochastic modelling tools. I now manage to talk about APIs, struggle a bit with blockchain but believe that Artificial Intelligence offers huge opportunities.
Whilst the pace of technological development at times feel frantic, as an industry we have to take responsibility to ensure that the end result improves the customer experience and encourages a savings culture.
2. Customers – You’ve got a friend (James Taylor). One of the most humbling experiences in my 30 years was a placement in death claims department taking calls from bereaved customers. At their time of need, the ability to reassure them that because they have taken advice, paid contributions into protection products and therefore didn’t need to worry about paying off their mortgage or how they would survive financially made me realise why I worked in financial services.
As an industry, we can’t lose sight of customers and sometimes amongst all the frenzy of developing technology, investment propositions, platforms etc., we need to ensure that we exist to help others save, invest and protect, in order to live the life they want to live.
1. The future – Imagine (John Lennon). What might the future look like? I don’t have a crystal ball but here’s the wishlist: No savings gap, people are funded in retirement, technology reduces costs and risks and new blood is coming into the advice industry.
At a Standard Life sales conference many years ago the theme was centred on the Honda advert – ‘The power of dreams’ (great video!) and this industry certainly contains the people and common desire to continue to move things forward. I for one, won’t be working here in another 30 years but in the meantime ‘Don’t stop me now’ I’m still having a good time!
And to end, here’s a great song which quite simply demonstrates the change the industry has experienced and hopefully will make you smile!