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Spread the spirit of Christmas

Let me refresh your memory, dear reader, on one of the greatest works of literature. No, not the Sandler review but that spectral tale of selfishness, miserliness and redemption, A Christmas Carol, written by Charles Dickens in 1843.

The stingy – or, more generously perhaps, prudent – Ebenezer Scrooge is first visited by the ghost of his long-dead business partner, Jacob Marley.

Transparent and menacing, Marley beckons in the prospect of spectral visits from his fellow spooks, the Ghosts of Christmas Past, Christmas Present and Christmas Future. Scrooge is then presented with a series of vignettes, colourfully drawn from his past, and is offered the opportunity to alter his future condition by embracing new attitudes and practices.

Scrooge&#39s nostalgic voyage reminds him of his early life as a schoolboy, an apprentice and, most improbably, a young man in love. He sees his present condition with clarity for the first time and is brought to the stark realisation that his selfishness and singular pursuit of wealth without compassion can only bring him a miserable old age and unmourned death.

Scrooge glimpses, too, the life of his long-suffering employee Bob Cratchit who, although poor, is noble, happy and rich in companionship.

He is so galvanised by this cathartic vision of his ultimate destiny that he becomes a changed man, generous, thoughtful and loving. Hey, come on, it&#39s Christmas and it is only a story. In short, Dickens delivers an emotive wake-up call against narrow-minded self-serving ways and offers a tantalising prospect of redemption.

Now, Ron Sandler may well be a touch too well fed to play the grisly and transparent Jacob Marley but he might indeed fit the bill as a similar harbinger of doom for the financial services industry.

Dickens&#39 morality tale offered Scrooge the chance to reform his ways. Less colourfully perhaps, Sandler would like the industry to correct past errors and embrace a bright new future.

His ghost of Christmas Past might take us back to a less regulated and more visceral era of financial services. Life companies ruled the land, bending distributors to their will like feudal barons.

In this enchanted country, consumer awareness slumbered deeply. The unit trust companies cowered in resentful silence since even the Government apparently sponsored the life companies with generous tax incentives to help sell their savings plans.

Christmas was an all-year-round phenomenon, with handsome bonuses at every stage in the value chain from investment management through to distribution.

As to advice, you could be a plumber on Friday and a financial consultant on Monday. With these exacting standards, it was important to compensate the adviser for all the time and effort expended against unsuccessful sales, as well as the ones that struck. Spooky idea, don&#39t you think?

An ambiguous actuarial sludge would prevent the consumer ever fully understanding how their charges would reflect this process of trial and error. If business was slow, there was also always the chance to persuade existing customers to rearrange their affairs, hence generating another nice little earner.

Sounds fun, doesn&#39t it? Unless, of course, you were the Bob Cratchitt of the day. Pity the customer who had the temerity to complain in this happy era of self-regulation. A cosy straitjacket of red tape and bureaucracy would surely throttle him.

Those times are now long past. The Government finally awoke to its responsibilities after too many Tiny Tims met an untimely end. Consumers gradually came to understand a little of the circuitous and perilous route their savings were following.

Sandler now beckons, playing the Ghost of Christmas Future and holding out the opportunity finally to part ways with old attitudes and customs.

Dickens, I guess for brevity, drew Scrooge undergoing an instant recantation. Exact parallels with our industry are not as completely accurate since our rehabilitation and reform has been going on over a longer period of time but nonetheless the central message pertains.

We have the opportunity to reshape the entire industry, top to bottom. IFAs have the possibility, with new technology and lots of new entrants with fresh ideas, to move away from the dependency culture which has been the hallmark of their relationship with life companies.

These future businesses will be remarkably different from the past and, as Sandler described, will finally move the core relationship from manufacturer and distributor to adviser and client. In that process, IFAs will begin to build real value in their businesses.

With products simplified, commoditised and reduced to mere tax wrappers, and with technology platforms easing administration, IFAs will in future manage businesses that are entirely client-centric, built around an advice proposition. They will attract clients on the basis of sound financial planning and advice rather than play the role of product finder.

Best practices from other markets will spread and the efficient will outsource much of what today is considered central to their proposition, including investment portfolio construction, and focus all the energies of their business to provide outstanding client experiences.

The model IFA business in the future will position itself as absolutely central to its client&#39s financial affairs. Developing a plan, delivering strategic financial advice and acting as coach and mentor to clients will be its new and rewarding role.

These firms will be in full control of their own futures. As we approach, Christmas this year this is a tantalising vision. Do you think the Cratchit family will like it?


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