At ‘Home Truths’, the Lang Cat live event in London on 9 February, it was great to witness around 200 advisers and planners engaging and debating, challenging and defending some accepted norms of the financial advice sector.
The thesis behind it all was whether the truths we hold to be self-evident across the industry are actually wrong, and so need to be re-thought, writes Ben Lester, head of distribution at Morningstar Wealth.
The day was structured around five pillars, or truths. For each one there was a time of debate and discussion with informed and articulate contributions all round. It was also good to see financial advice professionals firmly centre stage.
The culmination of the day was fascinating to watch, as participants both in the room and online were asked to make a series of five choices, one for each pillar, to build the ideal advice practice fit for 2033.
Now clearly those options were fairly arbitrary but we could see from the rest of the day that no small degree of nuance sits beneath them. The answers to these questions pointed to what we in the platform world need to consider going forward if we are to make sure we provide the services and functionality advice firms really want and need.
Results
Investing versus outsourcing – Will we make investment a key part of our skillset in our new business?
- Yes: 25% (Control the key aspects for clients)
- No: 75% (Leave it to the experts)
Adviser as manufacturer – Do we want the additional revenue (and responsibility) for taking on manufacturing as well as advising?
- Yes: 5% (Worth the risk, cost and complexity)
- No: 95% (No, it’s absolutely not worth it)
Independent or restricted – Will we go independent and demonstrate we’ve looked whole of market, or go restricted with propositions we know work?
- Yes: 57% (Independence)
- No: 43% (Restricted)
Broad or niche – Serve anyone who can afford us, or identify a niche and focus there?
- Yes: 44% (No need to specialise)
- No: 56% (Focus on one niche for now)
Planning or advice – Are we lifestyle coaches with some financials attached, or do we lead on solid advice with some planning attached?
- Yes: 37% (Planning makes the difference, focus on that)
- No: 63% (Get the finances straight first)
Expected results
These responses are pretty much in line with my instant predictions on the day, except for the last one: planning versus advice. I was surprised that planning was rejected by two-thirds; I expected the opposite. But that may be down to interpretations of what they’re doing.
Today it’s harder for advisers to focus on selling advised products rather than first delving into client wishes and lifestyle expectations, and then coming up with investment vehicles that address their needs. Consumer Duty certainly shines a spotlight on this.
The overwhelming feeling against ‘adviser as platform’ i.e. manufacturer is totally understandable. It’s risky. But if the question was about white labelling, where the firm appears to have their own solution but leaves the operations and servicing to the platform provider, I’m sure many firms would vote yes.
Platforms offering this give firms the opportunity to adjust the platform proposition to suit them while showcasing their brand, but without the responsibility of taking on the permissions, leaving that to the specialists.
Handing over investing to DFMs is definitely an increasing trend, while the relatively balanced attitudes towards independent versus restricted and broad versus niche are to my mind signs that the advice sector is healthy and in good hands.
Lasting impressions and a game plan
All in all, I was left with two major impressions. Firstly, it was heartening to see advice professionals so engaged in looking at what’s working well in their business, and what may need to change as the future unfolds, with a watchful eye on what their peers do next.
It is also clear that platforms have an important role to play when developing their proposition for advice firms. If these businesses adapt over the next decade as their client cohorts change, we need to collectively facilitate this by listening to our users and providing flexible functionality that empowers firms to offer their service in the way demanded.
This is particularly relevant when looking at the needs of younger clients and the ability for them to interact digitally, just as they would for any other service they consume in their day-to-day lives.
This article was written for International Adviser by Ben Lester, head of distribution at Morningstar Wealth.
