One of the most important and under-rated business skills is understanding change and how to make it work for you and your business.
The trouble is that change is easy to ignore, hard to implement and demands fresh thinking. Where does that leave the financial adviser faced with a world with endless change looming on the horizon?
The important thing is to know what changes are coming along and then what opportunities will be created and finally how do to plan for the future.
First, let us look at the changes coming along. By next year, we will see the impact of a low-charge regime starting to make a real impression on the amount and way that advisers are paid. This will be a reflection on the way that they choose to operate within the new regime.
The market will start to reshape into low-cost, low-advice, low-commission players and those at the advice end of the market, where their skills and experience will ensure they are paid a professional rate. Helping to accelerate this change are new rules on polarisation, which will possibly introduce new players into the market place, formerly the preserve of IFAs.
The new menu system, which also makes an appearance next year, will also ensure that the adviser must justify the cost of their advice to their customer and choose how they want to be remunerated.
It is not all bad news for advisers. There are life companies out there like ourselves that are already planning for change and planning to bring fresh initiatives to the marketplace. These will help advisers not only to find new customer opportunities but also help them prepare the structure of their businesses for the changes ahead.
Crucially though, there are still a few life companies with siren voices that say, carry on as you are and we will keep our fingers crossed for you. The business skill here for the adviser is to recognise this blind alley and avoid taking that route.
The adviser who gives advice will be the winner. Advice is not just about filling in a form and ticking boxes. It is about understanding the client in depth and having high-level technical skills on a par with any of the other professions, such as accountants or lawyers. Only then will the client feel that value has been achieved, allowing the adviser to charge appropriate fees or take commission.
This must be the ultimate direction for all thinking advisers, where their skills and knowledge can work for clients, particularly higher-net-worth clients, in the complex tax and pension regime that is so prevalent today.
Alternatively, the adviser will be faced with selling products that pay much smaller rates of com-mission as low-cost product gather pace in the market and where the Tescos of the world start to make their presence felt. Time is against these advisers unless they think and plan for change.
This leads me to how do we plan for change and the challenges of the future?
Research at Clerical Medical shows that over 80 per cent of IFAs do not have a structured business plan capable of taking them to April 2005 when the new world makes an impact.
They also need to look realistically at their productivity, systems, infrastructure, financing and their marketing.
They are not alone in this, product providers must do the same if we are all going to prosper. Sadly, the journey will be littered with casualties on all sides before we reach an acceptable standard of efficiency, customer service and professionalism.
Business planning and training are vital to allow advisers to reach much higher levels of professional expertise, not only to work with clients but also to run their business efficiently.
Planning requires vision, the sort of business vision to ask in a structured way, where will we be in three years time? The chart at the top of this page gives a template to set out realistic thoughts.
By laying out a practical vision for the future, the adviser can move to the final stage of asking, what do we need to do to move us from where we are to where we want to be? Only then can they quantify the action to be taken and the resources required.
As I said earlier, life companies are in the same position, they need to become more efficient, get closer to the customer and the adviser, cut costs and understand where the future lies for them.
This is the reality of change, a sometime painful process but one that will quickly show those destined to win from those who will be in steady decline.
Finally, the IFA voice must be heard in the clatter of noise that surrounds financial services, they are the core of our industry and life companies, regulators and all else must make time to help them through the next few years.