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Tom Baigrie: Stick to what you are good at

Is your business a holistic financial adviser, a one-stop shop or a non-adviser that is excellent at cross-selling? If so, which element of a client’s needs you are best at resolving and which you are worst at? And then, why does your business continue to do the bit you are worst at? Does no one else do it better?

I ask because whenever a consultant opines as to how my specialist protection inter-mediary could grow bigger and more profitable, they tell me I need to get into annuities or general insurance or mortgages because the profit in selling these things without any further client-acquisition costs is significant and helps client retention.

But I am not so sure that the right way to grow is as  a financial services department store. I look at the high street and see very few of those left and I look online and see a few multimarket giants. But then I look again and notice that actually, they really do only one type of thing.

So I wonder if the consul-tants are not out of date and whether consumers would not prefer that I passed them on to others whose sole focus and area of expertise are appropriate for their needs.

Consumers have learned that businesses, like people, have strengths and weaknesses and are normally only good at one type of thing.

That one thing may stretch across a few markets with clearly defined customer journeys, such as lending money or comparing prices, but it is still only one thing. 

Beyond it lies the “second sale” and of course, PPI was the mother of all such second sales, although I guess that would make estate agents selling endowments the little old grandmother.

Post-PPI, we can assume the FCA thinks every second sale is more than likely to be a sloppy one.

That would be why broad-church financial services businesses are stopping doing the add-on elements they once thought would do wonders for their customer experience and bottom line.

Clydesdale Bank is just the latest example and the scale of the retreat implies that the FCA is very challenging to those who market a holistic service but do not invest in making that a genuine “client first” truth.

The prudent financial services retailer should work out what they are brilliant at, then spend a lot of time either creating separate businesses equally brilliant at the other connected things their clients need, or forming proper commercial relationships with other businesses that are the best at those things. 

This way, the client would get surrounded by brilliance and not by folk topping up their bottom line by pretending to be all things
to all men.

While simple solutions and customer journeys are desirable, it is far more important to make sure the solution selected fits a consumer’s needs.

If you look at the FCA’s new monster budget, you might deduce that it wants to raise standards across the whole retail market in a way that the IFA-fixated FSA never managed.

That focus on raising standards in all areas will be one that specialist businesses find far easier to cope with than the traditional conglomerate model that has dominated our market since the 1970s.

Add that to the ease with which a new specialist – think Sheila’s Wheels – can nowadays become a household name and the model of the future is one where a business does what it is good at and eschews the sloppy second sale. 

That has got to be good for consumers.

Tom Baigrie is chief executive of Lifesearch

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. We charges fee to our clients for our holistic service. We refer to solicitors and accountants with NO kickback and use various local and national practices who we think best suits the client. We refer occupational pension tf business for the initial advice and then only charge for ongoing advice IF the transfer is recommended with just an admin fee for our work. I used to love doing protection work and invariably placed protection in trust with waiver and usually with CIC and am a great believer in IPP, but I cannot do all the work and do it well and without a larger back office function, it could make more sense to do my planning reccomend the levbles of cover and agree budget and hand over to a firm like Life search to efficiently place ethe protection which I then reconfirm once on risk matches my reccomendation. I would be interested in Tom’s thoughts on this in public. I have posted another as I want clients to come to me for the holistic and I implement pension and investment work, but already contract out mortgage work despite being authorised and think protection may need to be next so I can focus on what I am good at and what most clients come to me for which is the big picture.

  2. I agree Tom…. Jack of all trades and master of none is an all to common situation in financial services as it stands just now.

    However I dont think we will be seeing Shiela’s Wheel as a specialist for much longer unless it want so breach the new EU Gender Directive!!!

  3. @ Anonymous 9.58 as a specialist insurance broker I would be over the moon to service your clients and I am looking for an Invetment/Pension specialist to refer on our pension transfer business. Please let me know is this is of interest.

  4. What Tom is actually saying that we should all become restricted advisers as that would be better than what we have done for many years. I got news for you Tom. You stick to what you are good at and we will do the same. Offering clients appropriate researched solutions for a number of needs across the whole of the relevant market. Thats like saying to a customer who walks into a green grocer shop – “We now only sell apples, you should go to each of these other 6 shops to get the rest of your non fruit and veg produce”. I dont think so Tom, that is just madness, totally ludicrous suggestion as far as I am concerned.

  5. Speaking as a consultant who has advised Tom on more than one occasion to diversify into annuities or general insurance or whatever, I have to say that I completely agree with what he says in this article.

    The reason for this apparent paradox is that it all depends on what it is that you’re good at. If you’re good at life assurance, then you should no doubt stick with that. But is it necessarily right to define expertise only in product terms? If you define your expertise in a different way – for example, saying that you’re good at making things seem relevant, accessible and affordable to consumers – why would you want to focus on only one kind of product?

    There may be product sectors – or sub-sectors – in this industry which are so complex that it is dangerous to try to deal with more than one. In such areas, very high-added-value niche businesses are likely to thrive. But in mainstream categories, I’m not convinced that this level of specialisation is called for. As a consumer, I’d be perfectly happy for one of Tom’s very capable and personable advisers to help me with my health and motor insurance as well as my life cover, and I find it disappointing that he’s not willing to give me this option.

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