David Harrison has launched platform True Potential with a damning indictment of industry inefficiencies for leaving advisers reliant on big commission because current structures do not support thousands of small transactions.
He also claims that wrap is making things worse and says his system offers the best route to profitability.
TP will offer fact-finds, two-way tracking, real-time valuations and daily commission updates and payments to other IFAs and distributors, employing many of the lessons learned at Positive Solutions.
Harrison says it is a “pipedream” that advisers will move to recurring income as “so many of the rewards have been about up-front commissions.” He says: “Wrap is not the solution. Wraps cannot make you more efficient. In fact, they will probably make you less efficient in the short term. You cannot ignore existing clients and you cannot ignore the transactions needed to run a distribution business.”
He also suggests that much provider investment in big distribution groups has made the problem worse, creating large-scale groups or commission clubs but keeping inefficient systems which are not using the right technology.
He says: “The investment into the big players has gone mostly to stop them going under – it is not natural. All it has done is prolong the agony and not helped the market at all, rather it has caused a problem in the market.”
Harrison says uptake of technology is worse in the financial services industry than any other. He says: “Technology makes things worse in a way, with the slow take-up. You can get faster broadband and better service in a client’s house than you do in a typical IFA’s office. That has got to be bad.
“It is not the new business that is the problem – that is easy. It is the process afterwards that is the problem. You could probably conceive and design an aircraft carrier in less time than it could take to submit an insurance policy – there are just too many people in the way.”
He also slams providers with big helpdesks, saying manpower keeps costs high.
He says: “Never buy from a provider that needs a huge helpdesk. If their product works, you do not need a helpdesk. If you build it properly, it will work. If you need 80 people in your helpdesk, that is because your product is crap.”
Harrison says: “We have got to make it worthwhile for providers to change their systems, offering real-time savings so that all the providers can benefit. Whether you are IFA or multi-tie, complexity kills.”
He says: “If the way in which commission is collected changes, with movements away from up front towards increased trail payments, what is already a complicated area will become even more complex. The ability to cope with this increased complexity will be crucial.”