In its White Paper research study into the ‘future of distribution’ in the UK financial services marketplace, 1st – The Exchange examined the ‘urgent need’ for firms to plan ahead for the post 2012 RDR era. The Paper concluded that the industry must accept it is in a ‘unique transition period’: an interregnum or ‘gap’ exists and with it, opportunity arises.
Although applauding the efforts of a minority of firms to prepare for a future multi-distribution strategy, the research also warned that an idealistic ‘head in the sand’ attitude which is being adopted by many, is likely to accelerate further industry fallout prior to the 2012 deadline.
David Child, managing director, 1st – The Exchange, commented: “As worldwide financial instability continues, life in the adviser sector is understandably showing increased signs of strain, with many companies choosing to consolidate or being forced to admit defeat and leave the industry. Similarly, the failure or lethargy of many financial providers and distributors to adapt their strategic business models for the ‘new world’ needs urgent attention.
“But rather than seeing this period of volatility as an insurmountable barrier, the more astute businesses should recognise this interregnum – or ‘period of discontinuity’ – as a period of opportunity. The winners will be those focused on appropriate transformation of their business models, but with thorough preparation needed now - to develop and implement a focused and strategic approach to future distribution, with the right choice of resources, technology systems and partners being vital.”
The White Paper research also warned firms that, whilst focusing on looking forward, a return to the established economic basics is also important: recognition and respect for established supply and demand principles and basic customer needs must be taken into account. Combining this information with the obvious drive for commercial and economic efficiencies is fundamental: ‘only once this has been acknowledged, can the distributor of today migrate successfully to ensure they remain amongst the distributors of tomorrow’.
Over 120 FSA regulated firms took part in research as part of the 1st – The Exchange White Paper, with some interesting results:
• Half of advisers (51%) claimed their future focus (by 2012) would be with face to face advice for high net worth clients
• Only a small minority (7%) expected to move exclusively into pure sales or guided advice
• 16% of those surveyed admitted they expected to be ‘merging, selling or leaving the industry’ by 2012
• More than 30% saw ‘client segmentation and data quality’ as the business area which required most change in the run up to 2012
Full copies of the 1st – The Exchange White Paper, entitled, ‘Future Distribution – Interregnum & Opportunity’ is available for free download at www.1stsoftware.com/future_distribution.pdf
