Robo-advice and its many variations are dominating the columns of the trade press. So this article is (almost) a robo-free zone. Let’s turn to another topical issue: the Rugby World Cup. But what has that got to do with the advice market, I hear you ask? As with most sports, there are some interesting parallels with the business world. Here are five that apply to advice firms.
1. Get the balance right between structure and flair
The debate about the demise of the English team was painful and much of it was about style. The coaches’ approach was about structure, organisation, control and consistency but the argument against this is that it removes the flair and leadership needed in the heat of the battle.
The same challenge exists for principals of advice firms and it is hard to get right. In a heavily regulated sector, it is obvious a considerable degree of control from the centre is required, but all clients and advisers are different so, in practice, some flexibility is essential. There is no simple answer but it is worth considering if you have got the balance right. Ask the advisers but make sure they understand the world from your perspective as the bearer of greatest risk.
2. Do not under estimate passion and belief
On paper, Wales should not have progressed to the knock-out stages of the competition. Their injury list was so lengthy many wrote them off before the start. There is no doubt passion and belief saw them past England and come so close against Australia and South Africa.
In the advice market, passion and belief are key differentiators between competent and successful businesses. These firms have strong propositions, competitive edge and never have to discount. Such qualities are infectious and positively influence the people in the business as well as service and client satisfaction.
3. Stay legal
In rugby, the referee’s decision is final – regardless of how controversial it may be. There is clear respect between referees and players, and transgression is rightly punished. There is no hiding the fact such respect between regulator and regulated does not exist in the advice market but the principle of compliance still stands. Over the years, firms that have applied the rules of good business practice have risen to the top in terms of profit and respect.
In rugby, there is a productive dialogue between players and coaches on one side and the rule-makers and enforcers on the other. Indeed, there are no sides and, while there will always be disagreement, there is enough belief the game must come first to make it all work. Somewhere, there is a message for the financial sector and a need for shared responsibility to get it right. Maybe the Financial Advice Market Review will help?
4. Respect competitors
Several of the second tier rugby nations played well above expectations, with Japan’s defeat of South Africa providing a fine example. But the USA, which lost all its games, is an interesting case study, as the defeats were in the context of the sport being the fastest growing in North America. So, here is my one reference to robo-advice: this sector is growing fast (from a tiny base) and, like USA rugby, has the potential to make a difference in the market. It is only a matter of time.
5. Do not forget the customers
Without live spectacle and entertainment there would be no basis for a World Cup competition, including the millions of television viewers that drive the media revenues. It is not new for captains or players to apologise in defeat in a true perception of letting people down. This is an extreme example but it re-enforces the need to place customers at the centre of the business.
To be fair, many advice firms are good at this, with strong ethics and an understanding of the right thing to do. The rawness of the defeat of England by Wales and Australia provides a powerful reminder of how it feels when standards are not met and expectations failed.
So, what can we conclude from this? Management is difficult and made up of millions of judgements and decisions, be it in sport or business. There are some unavoidable rules of play: respect, consistency, integrity and belief in the game or market. Management style and adaptability to changing circumstances can make the difference between “good” and “great”, and most people secure success from clear direction, application, respect for the rules and listening to others.
David Shelton is a consultant at Stoke Bishop Associates