There is understandable frustration with what is seen by some as a disconnected policy machine whirring ad infinitum in the FCA’s Endeavour Towers.
Take the difficulty in reconciling the stated requirement for robust, consistent, repeatable processes with the now cautionary tones over centralised investment propositions and requirement to evidence the suitability of solutions for various client segments (a la the new Product Intervention and Product Governance Sourcebook – or Prod). “Damned if you do; damned if you don’t” is the sentiment expressed by many.
But the regulator will continue to make law and then be pragmatic about its implementation when it reaches the real world.
This “suck it and see” approach creates a high degree of uncertainty that does not always aid decision making for most businesses.
On the one hand, there are black and white rules and, on the other, the small matter of what supervisors decide to do about them.
These two outcomes may be entirely different and therein lies the tension; it creates risk for advisers.
There is little doubt the slew of regulation over the past few years has ramped up the risk significantly. But as one adviser put it to me a while back: “Regulation won’t kill businesses; poor business plans will kill businesses.”
Having started as pseudo sales outfits, building teams around them to support that mechanism, many advisers find themselves running businesses by accident. The art of advice, and the client-relationship nous that goes with it, is in continual refinement but management skills are a gap in the armoury of many. Too many businesses do not have a clear view of where they are heading – hence strategy is not strongly anchored and tactics often spurious.
Everyone agrees we have moved irreversibly away from selling and distributing products towards holistic planning, for which advisers are paid. There is little debate over the fact different clients will require different services and support at different stages in their journey, and that you may not want (or be able) to serve all of these all the time.
Advice businesses get this and are evolving but what is still lacking from many is robust business strategy. Where are you going and why? What is your model and who is responsible for making these decisions? What is your exit strategy?
When everyone is playing the same game, your strategy and execution of it are critical. Walmart founder Sam Walton was a huge success largely because he developed and executed a winning strategy, not because he was better at running a store than anyone else.
Phil Wickenden is managing director at Cicero Research