The FCA rules on inducements are seriously underpinning the thinking of many providers in relation to what they do (or don’t do) for advisers and what support they deliver.
What providers can and should spend their support budgets on is a big concern and some will be looking at the guidance as a convenient and plausible excuse to cut back. This would be a mistake.
We will be directly addressing the full impact of the Final Guidance on inducements and conflicts of interest set out in FG 14/1 in the coming months. But, in principal, any support that results in the enhancement of the service provided to the client – that is, by better informed and equipped advisers – is totally permissible.
Putting a positive spin on the backdrop of depreciating support: standing out has never been easier, as our recent adviser study ‘Profit Through Partnership’ clearly demonstrates.
Business and technical support are becoming more important determinants of provider and platform selection. But as demand has risen, provider delivery has plateaued at best, representing a big opportunity for some fairly chunky ROI on any activity delivered remotely well.
Our research, in the table below, shows that the importance of demonstrable expertise has risen in over half of the 15 business and technical support areas we measure, most notably in relation to consultant support. No single area tracked has become less important in the last six months. But as the bar has risen, providers’ proficiency has, on the whole, not, which has contributed to a growing support gap.
We asked advisers to think about the process they typically undertake when deciding which providers/platforms to use, allocating appropriate weighting percentage across key influencers:
While the product/solution (including cost considerations) was weighted as the single most important factor (32 per cent) its importance is not as pronounced as may have been expected given that the suitability stakes are so high. Indeed, service (28 per cent) and the overall support package offered (25 per cent) each account for just over a quarter of the decision.
The so-called ‘race to the bottom’ and the pursuit of lower charges has become rather an obsession in the industry. But with charges, fund ranges and core features converging, providers and platforms that want to thrive will need to look beyond the basics.
Stripping out costs that do not drive value and being competitive on price are clearly important but it should be just the start. Once you get past the functional things like cost and fund choice (which won’t differentiate you for much longer) it is the total experience that makes advisers react (positively or negatively). Far better to build loyalty to you, not your price.
Phil Wickenden is managing director of So Here’s the Plan
Business and technical support leaderboard
|RANK||WEIGHTED BY CLAIMED IMPORTANCE||% score||WEIGHTED BY DERIVED IMPORTANCE||% score|
|1||SCOTTISH LIFE||77.6||SCOTTISH LIFE||77.3|
|2||JUST RETIREMENT||77||BRIGHT GREY||76.5|
|3||BRIGHT GREY||76.8||JUST RETIREMENT||75.6|
|11||SCOTTISH WIDOWS||66.1||SCOTTISH WIDOWS||66.3|
|18||CANADA LIFE||61.9||CANADA LIFE||61.3|
|20||FIDELITY FN||58.4||FIDELITY FN||57.8|
|21||ALLIANCE TRUST||54.6||ALLIANCE TRUST||53.5|
|23||FRIENDS LIFE||44.8||FRIENDS LIFE||44|
Source: So Here’s the Plan