View more on these topics

Product of the equation

Tax Planning.

Two recent projects we have been working on have convinced me that a simple and almost embarrassingly obvious paradigm shift has to be made by those seeking to serve that part of the market requiring more than the mere satisfaction of an order with a financial product.

That shift is the recognition that the “product” for this market is not the hard financial product manufactured by the product provider but the solution to the client&#39s problem – in other words, a means of enabling the client to achieve his or her financial objectives.

The reason for the shift starts with the harsh reality that, for financial advisers (tied or independent) who wish to do more than merely deliver increasingly low-margin products, it will be necessary to extend their competence beyond the understanding of financial products and outwards into a real understanding of the context in which those products are to be used by the client base.

This is the only way that these advisers will be able to deliver the solution that their clients require. This is not meant to sound patronising although I accept that it may. Of course, for many years, the better advisers have been doing this and that is why they have developed a true relationship-founded business rather than one founded on transactions.

But even for those who have been working in this way, there can be no resting on laurels. The complexities of financial life increase, meaning there is a greater need to spend time developing the skills to understand, effectively communicate and make recommendations in a changing financial world.

It is generally thought – and Steven Covey states this succinctly in his book, The Seven Habits of Highly Effective People – that those serious about their business need to spend around 20 per cent of their time developing production capability. Without this investment, an individual&#39s ability to succeed and drive forward in a complex world diminishes and the long-term future looks unattractive.

With this investment of time, however, the individual is able to increasingly differentiate – an important factor in a very competitive world.

In recognition of this, those product providers looking to distribute their products through advisers (indep-endent or tied) need to recognise what those advisers require from them. At a very sim-ple level, those advisers require a business development partner who will help them develop personally and in terms of their business.

It is at this point that I can turn back to my belief that a paradigm shift is needed. I have looked at this shift in the context of advisers but, as I stated earlier, product providers distributing through advisers are not exempt since they need to align their business with advisers to ensure continuing success and continued differentiation for them in the eyes of advisers.

Of course, there will be those product providers – especially those newly entering the market – which decide to dispense with any human intervention in the delivery pro-cess. But, for those which continue to use advisers, it is inevitable that they must accept that, based on what the buying client requires, they need to be ensuring that the adviser is properly equipped to be effective in meeting these new wider demands.

The product provider, in my opinion, needs to review what it considers to be its core product range. There needs to be a widening of what it understands by its “product”. If it is to facilitate maximum effectiveness of its delivery channel, then it needs to consider carefully not only having good financial products but also good professional development and support of its delivery channel and, increasingly, having the means beyond the core financial prod-ucts to deliver the entire solutions that the discerning market will require.

Imagine an adviser having to tell a client who is interested in making a wonderfully tax-effective pension contribution that, while the tax results explained will be secured, the individual now has to go and seek separate legal advice and services to secure the necessary documentation.

There is absolutely no doubt that (aside from the tax attractions) having the means to implement the complete solution from explanation to implementation is a key reason why so much pension business has been done.

Companies wishing to secure funds under management into their core investment products presumably recognised the necessity for this. They recognise the importance of having more than the mere financial product if they are to be successful in this market.

As a result, the entire pension implementation package including, where appropriate, deed and rules, member communications, and so on, is seen by both the ind-ustry and advisers as being incorporated in the compete solution.

Indeed, it may be that the entire package is seen as “the product” in this context. I believe that in other areas of business, this acceptance of the need for delivery of a wider package to facilitate a complete solution is essential to success.


Framlington looks to Nasdaq

Framlington Asset Management has announced the restructuring of its old American smaller companies fund.The unit trust will now be known as the Framlington Nasdaq fund and is still aimed at the smaller investors who want to get some exposure to the US sector. Formerly benchmarked against the Russell 2000 index, it will now aim to […]

Stakes and ladders

Confusion is widespread as employers struggle with stakeholder.Employers are holding out until the general election before tackling stakeholder, fearing a possible change of Government could mean a change in stakeholder.Opra is concerned that stakeholder legislation on employers advising on pension schemes is being misinterpreted and employers are calling for clarification.The debate has been stoked by […]

Polar climate has left friendlies in the cold

The Association of Friendly Societies claims polarisation has marginalised its products and welcomes proposals for gap filling in the LE report.It is now 12 years since the Government introduced the concept of polarisation as a way of ensuring that financ-ial services customers knew what they were getting and from whom.It seemed so straightforward – customers […]

Rod MacDonald – Permanent&#39s sales and marketing manager says he is too focused o nexpanding into the protection market to worry about which company will take over parent Equitable

Despite the uncertainty hanging over the future of Equitable Life, it is business as usual for protection specialist subsidiary Permanent Insurance.The company is eager to let IFAs know it is not affected by the dispute surrounding its parent company.Permanent says whatever company ends up with Equitable Life will also be the new owner of a […]

The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm