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What advisers are saying: Price is only one factor when choosing providers

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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

What advisers are saying-24Apr14

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
4 TRANSACT 73.5 TRANSACT 72.5
5 AXA 72.9 STANDARD LIFE 72.4
6 STANDARD LIFE 72.9 AXA 72.4
7 AEGON 70.2 AEGON 70.1
8 ZURICH 70.1 ZURICH 69.8
9 PRUDENTIAL 69.6 PRUDENTIAL 69.1
10 PARTNERSHIP 69.4 PARTNERSHIP 68.7
11 SCOTTISH WIDOWS 66.1 SCOTTISH WIDOWS 66.3
12 SKANDIA 65.6 SKANDIA 64.9
13 METLIFE 65.4 METLIFE 64.8
14 LV= 65.3 LV= 64.7
15 ASCENTRIC 64.9 ASCENTRIC 64.5
16 AVIVA 64.6 AVIVA 64.4
17 L&G 63.4 L&G 62.5
18 CANADA LIFE 61.9 CANADA LIFE 61.3
19 NUCLEUS 60.3 NUCLEUS 59.8
20 FIDELITY FN 58.4 FIDELITY FN 57.8
21 ALLIANCE TRUST 54.6 ALLIANCE TRUST 53.5
22 COFUNDS 49.2 COFUNDS 48.5
23 FRIENDS LIFE 44.8 FRIENDS LIFE 44

Source: So Here’s the Plan

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