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So I wonder if the consul-tants are not out of date and whether consumers would not prefer that I passed them on to others whose sole focus and area of expertise are appropriate for their needs.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