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How forward thinking can help your business

Now that we are over three-quarters of the way through 2002, we have to look forward to 2003. Many businesses may already have completed their plans for the year ahead. What assumptions have they made about the year to come?

In financial services, we are more exposed to the economic environment than many businesses so it is essential that our planning includes a strong, challenging review of the situation.

An important area to consider early on is expectations for the stockmarket. What may happen over the rest of 2002? Where will the market go in 2003? How volatile will it be? You only need to consider the fall in unit trust and Isa sales since the decline in the FTSE 100 began to realise how important this is.

If your expectation is of a swift recovery in the market, what does that mean for investment sales – rapid increases in sales by refreshed consumers or continued reticence until there is sustained evidence of recovery? Are you expecting or maybe even banking on a good Isa season around the end of the tax year?

Alternatively, what products should providers be pushing and advisers recommending if markets continue to decline or, at best, flatten out? Is it time for a bit of innovation from providers?

Products which offer consumers a degree of protection if markets decline are likely to be very popular, whatever circumstances arise. If the market is improving, then consumers may still look for the reassurance that an underpin provides. If the market is flat or declining, these products also have a strong place, not least, of course, because the important issue is the market movement over their whole term rather than at the time of investment.

With-profits products are also likely to have a strong part to play. Although we have seen bonus cuts from many providers recently, the reductions have generally been lower than the falls in equity markets. This shows the value of a mixed asset approach and of active asset allocation.

In addition to the economic environment and consumer confidence issues, we have a range of other issues to contend with in 2003.

A number of the recent Government-sponsored reviews, such as Sandler, will progress to a second round of consultation and possibly to new regulations being introduced. What will this mean for the industry? What should be assumed for business planning purposes?

What changes, if any, will we see in distribution arrangements? How will this affect your business? How can you take advantage of change or minimise any negative impact?

One of the key approaches in business planning is to consider a range of scenarios and to test your company&#39s ability to cope in each one. This can often reveal risks or weaknesses for the business which can then drive the planning and prioritisation process.

However, something we must not do is lose sight of the present. 2002 is not yet dead and gone – there is plenty of mileage left.

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