Almost without exception, every part of the financial services landscape that we thought was stable has been turned upside down and shaken about over the past year or so. This uncertainty obviously encompasses the stockmarkets though even distribution is suffering upheaval.
If we think back only a few years, distribution was fairly straight forward and could be split into two distinct categories:
1. Product providers sold direct to the public via their direct sales forces or via IFAs
2. Investment Houses sold via IFAs and direct, usually utilising off the page advertising
Things slowly changed with IFAs having their own broker bonds and Skandia starting to sell other companies’ products, though this evolutionary development started to accelerate with the development of white labelling and strange, often Antipodean or American imports such as fund supermarkets and multi-managers. With time, increased computing power and particularly the growth of the internet, all these new advances became accepted but they did not really disturb the usual distribution models too much. Recently, however, all this has changed with the advent of RDR and the coming together of a number of separate, unrelated strands into the marketplace. These changes are also constantly evolving so there is little chance of a steady-state that we can learn to understand fully.
For those living in the proverbial cave, the RDR is merely the latest change since the Financial Services Act in ’86 - commission disclosure in ‘93 (which I thought would destroy the industry – I’m delighted to have been proved wrong); depolarisation in 2005; a move by the FSA from rules to principles; the introduction of Treating Customers Fairly (spelled out as a surprising number do not know what the letters stand for); and finally the Retail Distribution Review. This was launched by the FSA in the balmy economic conditions of 2006 as a response to what they perceived to be recurring problems in the retail financial services market such as product and provider bias, churning of products, lack of access to financial advice and a perceived lack of professionalism. This latter has meant that ‘grandfathering’ is now longer allowed, though current industry qualifications will definitely be taken into account under the FSA’s ‘no regrets’ policy so it is still worth your time taking diploma level qualifications.
In the considerably choppier economic conditions of 2009, all the above now means that whatever money the investing public has, there are potentially a similar range of eventual destinations – pensions and investments that have not altered too much (though SIPP providers might argue that point) though there is a bewildering array of routes to get there.
Multi-manager, fund supermarkets, fund of funds, platforms and white-labelling are all forms of investment distribution and are all potentially accessible by IFAs, direct sales, bank staff and even direct via the internet. The complexities of investment / asset allocation etc mean that all advisers need to be able to use the tools that the packagers have on offer so as to be able to offer the levels of holistic aftercare and service that customers now demand. Ironically, because there is more information available, the ability to sift through that glut of data becomes ever more important and this means that advisers need to become much better qualified – another RDR requirement.
For both potential and current advisers, there has never been a more important time to get qualified. We are in an employer's market and they are being driven to only recruit the best so as to be able to both obtain and retain business.
That means recruiting highly qualified professionals who can exceed customer expectations which means using experienced recruiters such as ourselves who are able to access these candidates!
Courtesy of Harris Keillar for Money Marketing, July 2009
