“No plan survives contact with the enemy.” I cannot remember the name of the Prudential broker consultant who gave me that one-liner several years ago but I do know he was ex-Army and that is where he got it from. After all these years, I am still very grateful for the gift.
In our business, the “enemy” is the marketplace or ultimately the customer. No matter now carefully we plan, how clever we are or how expensive the consultants we employ, once the ink is dry on the plan it is wrong already. That is how life is now. Markets move too fast for a five-year business plan written to three decimal places.
As my friend Philip Rose of Wentworth Rose likes to put it: 'If you want to hear God laugh out loud, show him your plan for the future.”
These last few weeks, I have been helping people grapple with exactly this problem – how do you plan the future of your business in a hugely uncertain environment? What has been especially interesting is that I have been tackling it from two wildly different perspectives. At one end, I have been working with a major UK life office helping it to build its strategy for the intermediary market of the future.
At the other end, I have been helping a small firm of IFAs to exploit a compelling idea it has for making money out of stakeholder pensions. All those interested in this, please form an orderly queue outside my door.
My life office friends have quietly impressed me with their disciplined approach. Their style is a little dispassionate for my taste but you cannot have everything. I find myself wanting to scream tow-ards the end of yet another sixhour meeting: “Come on, guys, this is your future we're talking about here. It's okay to get excited.” Too many people in our business seem to need permission to get excited.
Still, what has impressed me most has been their determination to stay out of markets they believe are unlikely to become profitable. Over the last couple of years I have met senior people at two dozen or so major product providers to discuss stakeholder pensions.
They all agree with the view that once the market settles down there will only be a handle of profitable survivors. All two dozen of them believe equally profoundly that they will be one of those three or four profitable survivors.
Back to the question I posed earlier – how do you plan the future of your business in a hugely uncertain environment? Of course, there is no simple answer and the complicated one will cost you lots of money. One thing that works for me, though, is to start from a base assumption that everybody can subscribe to and work forward from there. My base assumption is this. The demand for high-quality faceto-face advice will continue to grow strongly over the next few years.
That is true whether polarisation remains in its current only slightly watered down state, if the vested interests get their way and it is dumped or – my best guess – we see some further tinkering around the edges.
Who will the winners be? Advisers if they continue to raise their game, consumers if the FSA feels able to defend the status quo on polarisation and those product providers which do not try to emulate the lemming-like dash for control of distribution that occurred when the Financial Services Act came into force in 1988.
If you lost a fortune trying to create a direct salesforce, the chances are you will lose a bigger one now trying to buy your way into multi-tied distribution where you have even less control over the distributors. Do not fall into the trap of believing your own Powerpoint presentations.
Tony Kempster can be contacted at firstname.lastname@example.org