So, the big news of the day is Standard Life reversing its 2010 decision to place clear blue water between itself (as a provider) and financial advice, and follow Skandia into the restricted advice market. We surely live in interesting times and time will tell whether this is a good thing for customers, for the market more widely or for Standard Life / Skandia shareholders.

    Success will ultimately be judged by the ability of big manufacturers to deliver quality, tailored customer-led financial planning. Whether that is motivated by selling funds, punting DFM services or distributing platforms isn’t really the point, if the component parts are good enough and they are assembled well then there is every chance of a good outcome. Likewise I’m not sure anyone can get too excited about the independent / restricted labels – there are loads of examples of good and bad on both sides.

    What interests me most is the motivation and execution of these projects. There are few businesses in any sector who are good at everything and I think that’s becoming more true than ever as technology lowers costs and accelerates the pace of societal change. Platform margins have been squeezed and asset management pricing is under severe pressure so maybe owning a chunk of the advice bit is the only way that the sector can support its cost base? But that shouldn’t be the motivation and the direction is at odds with other industries, where verticals have been unpicked and replaced with brilliantly integrated horizontals where excellence is demanded in each layer. It may be different here because the people element is so important, but how many great financial planners want to work for an insurance company?

    That is the biggest challenge for vertical integration in our sector – where retail asset management costs are plummeting for everyone and technology is making it ever more possible for small advice firms to improve efficiency and deliver brilliant customer outcomes, can vertically-integrated businesses retain and motivate the individuals required to consistently deliver the same quality of outcome to ever more demanding customers. I guess it has worked for SJP…


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