During the last 12 months, a number of organisations, have announced their intention to leave part or all of the retail market. This has led to a certain amount of consolidation and move-ment within the market.
The fear and challenge that consumers, particularly in the mass market, will not pay for advice has become ever more prevalent but PwC believes there is a clear opportunity at the end of the rainbow.
Consumer research conducted by PwC during 2010 shows there are a number of key value drivers that make a significant difference to consumers’ willingness to pay for advice in an RDR world.
After 2012 will be a chall-enging time for many organi-sations but there is equally a significant opportunity for those who do not simply comply with RDR regulations but that consider the wider distribution landscape.
Financial services comp-anies must listen to their customers, price fairly and really develop their propositions rather than simply re-engineer the current challenged model. The world is evolving, as are consumers, and, after 2012, solutions need to meet these demand-led changes head-on.
Consumers will pay for advice, even in the mass market, but this requires companies to review their models critically and develop consumer-centric prop- ositions to maximise what consumers are willing to pay.
Building for the customer, rather than for the organi-sation, is key for those wanting to grasp the advisory oppor-tunity. For many organ- isations, this will be their greatest challenge. Those that realise this have the strongest chance of future success.
The vast majority of the industry has been increasingly challenged by the RDR during the last two years. There has also been an growing realisation that the RDR is a signi-ficant catalyst of change to the commercial strategy of many organisations operating in the financial services value chain.
The most significant fear is whether consumers will pay for advice in the post-2012 world and, second, whether they will pay enough to justify advisers’ day-to-day challen-ges and risks. For those advanced enough to have already moved to a post-2012 environment and operate on a fees basis, there has been less angst. However, for many, the challenge remains and the pressure will increase throughout 2011.
Taking the initiative now to plan the most effective route map, which provides the best chance of creating a sustainable model, is essential. Organisations should be reviewing their propositions to make them as consumer-centric as possible and looking to implement programmes to meet the demands of the new commercial model.
Keith Webb is a director at PricewaterhouseCoopers