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Kim North: Advice market regulation needs to go back to basics

Kim North

When it comes to setting up your stall to sell products or services, the “seven Ps” of marketing should always be followed. These are: price, promotion, people, physical environment, process, product and place.

The stalls of the pension policymakers do not appear to be taking these principles into account. Take, for example, the idea of secondary annuities, which was first mentioned in March 2015 by then-chancellor George Osborne as part of the pension freedoms.

The government confirmed the plans would go ahead in April. But last week it scrapped the idea altogether citing “the consumer protections required could undermine the market’s development”.

In this case, little regard was given to the physical environment principle. If detailed analysis was undertaken early on about what would actually happen when the annuity freedoms were launched, this U-turn would never have occurred.

As the FCA encourages us all to innovate and join free from reprisal in sandboxes, I feel sorry for those who tried to do so in the secondary annuity space. Who can blame them for forging ahead as secondary legislation was written and published.

It is hard enough to be innovative while keeping compliant to the FCA’s conduct of business rules that have become more prescriptive year by year, let alone having to guess if announced changes are going to go ahead.

Meanwhile, the marketing principles for guidance provided by Pension Wise could have given more regard to the product point. A recent survey found half the customers that make an appointment with the organisation do so to get a specific recommendation on what to do with their pension pot, despite this being outside its remit.

So while we wait for the Government to replace the statutory guidance providers I urge the powers that be to take the seven Ps into account – before millions more pounds go down the drain.

Consumers want product advice at a small price (say, £150) and delivered in a way that suits them, such as Skype, by good, technical, polite people. And why do I suggest a price? Well, marketing experts know that, when a price is attached to something, it becomes an important decision and more time and care is provided searching for value.

As Warren Buffet once said “price is what you pay; value is what you get”. I have always thought free advice devalues any promotion. A tiered advice service is needed: product advice paid for, debt and guidance free.

The service should be controlled with the early adoption of the Mifid II requirement to record telephone and online calls. Advisers are found to be more compliant when having to record calls and online messaging (no surprise there) and consumers cannot run to the ombudsman saying they were not told an important fact about investing.

Many technology firms have the recording kits all ready to launch; some of which is very impressive. The seven Ps and great technology is a sure fire way to business success.

Kim North is managing director at Technology & Technical


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. We’ve been recording since 2007, photoing client ID and other docs since the cameras started appearing on phones and used Psion handhelds with clients from 1996. I submitted a staff suggestion that all relationship managers had them in 1987 when hardly anyone had a basic mobile phone I think it was… but it didn’t get adopted.
    Even the NHS do it now for evidence of bed sores and for consent as they use both cameras and recordings of consent where the patient can’t sign.
    As I’ve said many times before a signature is increasingly worthless as it doesn’t show any context and multiple signatures devalue legal documents. Recording demonstrate context, tone of voice and so on. Video would be even better, but is more complicated.

  2. We oppose phone recording if only on the basis of cost. We have never come across a situation in 100s of man advice hours where there has been a dispute about costs. All conversations – and there are few of them these days a emails are just as good – are written down and sent to the client for confirmation. And for those who give advice, we do not play back recordings – if we can find them – but look at notes which are often highlighted. Who really wants to trawl through recordings for information.
    This is evidence yet of an inability to control firms that have rubbish processes and dump legislative convenience on IFAs who work hard to look after clients. There is no benefit to our clients in recording calls – just further inconvenience and cost. Let firms decide what is appropriate for them.

    • Sorry Sam but would have to disagree- recording software is practically free, data storage costs nose-diving, search facilities readily available and transcriptions services getting better every week- we have been recording everything on phone and FTF for 3 years now and the recordings are part of client record- I am personally fed up of seeing poor advice cases being used to beat everyone else over the head with- recording- in my view- is only true audit of what has happened and what was said- and in fact the only true ‘memory’ years down the line.

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