We all know that the financial services industry is undergoing major upheaval but should we be asking ourselves whether our main concern is coping with the change or whether the problem stems from the uncertainty of not knowing how competitors will react? Until we do, how will we know how we will stack up against the competition in the future?This applies to IFAs and product providers. Having a well-defined plan to cope with change is vital but the real impact will only be known when the players in the market have had the opportunity to start interacting and the market starts to settle down.
Much has been written about the challenges facing IFAs in coping with change, but the new world also poses many questions for providers. There are obvious issues in terms of market focus, product development, technology but for providers who are dependent on IFAs for business, the turmoil facing IFAs raises further questions. How can providers enhance relationships with IFAs through this change cycle?As products become increasingly homogenised, a key differentiator is the relationship developed between provider and IFA. From the pro- vider’s perspective, this poses some interesting questions. Historically, the broker consultant – the distribution “face” of the provider – has largely been someone who provides technical information, new business support and, in many ways, troubleshoots – hence, the coining of the nickname, the gunslinger. This role is important to help build trust and provide advisers with a helpful point of contact but I believe it will not be enough in the new world.
Over the last few years, we have seen an overall reduction in the number of broker consultants across the range in all but a few major players. But are these reductions just a kneejerk reaction to reduced margins and increased costs? Have they assessed the impact it will have on the real issue – improving service levels to the IFA customer?There is an important role for broker consultants if they can evolve into professionals with wider appeal, embracing new technologies and keeping a hands-on personal approach.
The days of pushing products, debating allocation rates, comparing charges and negotiating commission terms are, in my view, numbered. During research carried out on PIMS in January 2004, it emerged that the three most important drivers for advisers were:- Profitability, Controlling costs, Legislation and regulations. You may say these answers are is hardly surprising but if you look back to December 2002 the same questions were asked and prof- itability did not even appear in the top five.
Transforming the typical broker consultant from a professional salesperson to behaving like a management consultant will not be easy but I believe they can add value for life companies.
Last year, Winterthur Life launched Professional Edge – a range of support services aimed at IFAs – bespoke support to complement key business priorities. We have found that IFAs most value services that are different from what is commonly available and that support the key business goals of the companyIn the current financial climate there is only so far the product provider can extend these services so it is important to consider what support IFAs really need.
Some services are expensive to provide so it is likely that a charge may have to be made, possibly only partly covering the cost of offering the service. The provider can add value by securing bulk discounts that would be unavailable to IFAs who are not part of a national or network.
Are the days of the gunslinger numbered? If, like Clint Eastwood, the gunslinger can adapt and widen their repertoire to sustain a popular and valued career, then perhaps there will be a happy turn in the story.