Well hello, Product Intervention and Product Governance Sourcebook. Or Prod, rather. The new rules from the FCA mean advisers will need (yet another) form of process in place to make sure the right target markets are identified for the particular products they recommend. And, of course, there is also the requirement for advisers to check that the target market is still right on a regular basis.
To be a tad reductive (but no less poetic), market segmentation is a natural result of the vast differences among people.
But the trick, as with any segmentation, is to really understand what makes certain groups of people different from others. What unites them in their otherness? This is critical, beyond Prod requirements, because there is no more “everyone”. Instead, there are many pockets of “someones”.
Our job is to find the disconnected and connect them; to find people eager to pursue a goal, in a particular way, and give them the structure, service and support to achieve that goal. In this respect, much as RDR did, Prod is doing little more than mandating that which will fundamentally help advice propositions.
Advisers can no longer afford to treat all clients as equal. But this has been the case for some time. First, they need to ensure that each client gets exactly what they are paying for and eradicate over-servicing. Recurring income must then be inextricably linked to the level of service each client receives. This takes the guesswork out of an adviser’s growth strategy, and most get this.
But here is the crux: segmenting on the basis of assets alone is not enough. Sadly, most advisers have not got past this point yet, which is a shame because foisting clients into service propositions on the basis of their worth to your business alone may build better economies but will not build long-term client value.
The evolution of data and technology has enabled modern marketing to be more precise, relevant, personalised and, most importantly, contextual.
Accordingly, it pays to shift thinking from target audiences and client segments to personalisation, context and predicting behaviour.
This requires brands to converge the isolated and fragmented data sets across first-, second- and third-party client data into a connected, universal client profile. This profile is channel-agnostic and impacts every single touchpoint. No mean feat.
Phil Wickenden is managing director at Cicero Research
Q: Do you feel comfortable you can satisfy requirements from the FCA’s Product Intervention and Product Governance Sourcebook?
Yes, completely: 30
Yes, in part: 38
Source: Cicero Research