Our cover story this week is about a financial planning firm which has more than doubled its adviser numbers in the past five years. The name might surprise you: Prudential.
Evidently, the brand is familiar. It’s a savings product titan and, many moons ago, had a unique business model that captured the public’s imagination. What has flown under the radar is a financial planning arm that has increased adviser headcount from 129 in 2012 to 325 in 2017, with the promise of much more to come.
Prudential’s position is clear: We are not going back to a tied salesforce that pays people to put products in front of your grandmother. We are going to be a genuine, holistic, financial planning practice that helps steer people through the choppy waters of retirement.
But that does not mean the advice will be independent. In fact, the restrictions are pretty significant. The people who think Pru’s decision to hire advisers en masse is a good one for the industry, and the ones who don’t, will probably be divided into ones who think restricted advice is fine, and ones who don’t.
The nature of the restriction is key. All the investment products are Pru’s solutions. Annuities, because rates are all important, will go to a panel, which will be as near to whole of market as it gets, the firm says.
Whether you like the set-up or not, in the end, more people will get advice. If Pru stumps up the cash for automated advice services, that might turn out to be quite a lot more people. It has the resources to train young advisers too. But what is important is that people are not just chucked into Pru drawdown products because they have identified a segment of their own clients who might be willing to pay for advice and not just sit in a legacy product they barely knew they had.
Pru’s plans are also ambitious when every consolidator, network, national and provider is fighting for the same insufficient supply of high quality advisers. Why would an adviser join Pru when they could join Standard Life, Aviva or Old Mutual, as they also look to hire more planners? Why wouldn’t they join St James’s Place for that matter, with its long-established processes and reputation for taking care of its own?
The answer seems to be to play a similar game to SJP: offer incentives for writing more business. Prudential Financial Planning’s boss Chris Haines tells us that some advisers with the firm might end up earning double what others do on this basis. If that is the case, combined with the strength of its brand, Pru might come out on top in the advice game after all.