Writing in the context of the Financial Advice Market Review in a past column, I touched on the strength of our great financial services manufacturing businesses (in particular, life companies, banks and fund managers) versus the need for strong intermediation as the best way of ensuring such strengths are continuously improved. It got me thinking about how those two groups – intermediaries and manufacturers – might better collaborate so as to better serve consumers.
The present system is one of account management aimed at furthering competitive advantage. Its roots lie in the issues of very large businesses seeking to deal effectively with very small ones. The solution that evolved was that of helpdesks and account managers.
It helps at a micro level. Individual clients can benefit from intermediary intervention and manufacturers can earn competitive advantage through good service and personal product marketing. Its worst abuses have been stopped by the RDR and the FCA’s effective banning of inducements but, although it may do little harm now, it does not do any macro good. It offers no effective way for intermediaries to focus manufacturers on the product and service developments they know would improve consumers’ outcomes.
In the market I know best, protection, there is a host of good initiatives that struggle because they appear to manufacturers as threats or opportunities to seek competitive advantage. This means they tend to be supported by manufacturers seeking competitive edge and blocked or ignored by the others.
The innovative subject access request approach to gathering data is crippled because this lack of unity meant the medical lobby won the day over a split insurer lobby. Likewise, UnderwriteMe has taken ages to struggle into life. Even the excellent 7 Families collaborative marketing effort is forced to live hand to mouth as it seeks to break through into consumer consciousness.
Some time ago in this space I mentioned the idea of a trade body focusing on the needs of protection intermediaries.
The idea foundered because there are so few of us whose primary focus is protection. But the purpose remains unfulfilled: to work with life insurers to improve what we offer consumers.
Perhaps it is time to suggest replacing or at least supplementing the “account management” relationship between intermediaries and manufacturers with a new approach designed to encourage both to work together to improve what they do for consumers rather than just to gain an edge on competitors.
Because the independent end of the intermediary market is made up of so many disparate smaller firms, there is little positive encouragement any of them can generate.
All this would change if manufactures could have a well-supported intermediary body to work ideas up with so the risks of early adoption are much reduced.
Tom Baigrie is chief executive of LifeSearch