It is, in a way, reassuring that even in these troubled times, Californian billionaires still find new ways to get us to buy very slightly different versions of things we have already. Human nature is still intact.
Speaking of human nature, last week’s Update sparked a near-unprecedented flurry of various interested parties and observers taking a moment out of their busy schedules to share their particular view of the issues around DFM services on platforms. All very enlightening. The VAT bit is only the start of it (I have the Jim’ll Fix It theme tune in my head, as do you now, you’re welcome) – there’s lots to think about in terms of this unusual bringing together of disciplines.
The more I dig in around this topic the more it becomes clear to me that there is plenty of space for all sorts of different ways of working, but also that the wrong people are driving it contractually. We’ve talked before that after RDR advisers became price makers rather than price takers – that is to say you have the power to control the total cost of ownership your clients are exposed to. I think in the same way you need to become contract makers rather than contract takers.
A little while ago we did a review of contractual documentation for a lovely firm down in the East Midlands. We were looking to see that everything they were doing for firms was on a sound basis – it was – but we also found that some of the terms they were bound by from some suppliers weren’t particularly compatible with one another. Not a big drama, but worth being aware of. The inter-relationship with DFMs, advisers, clients and platforms is a good example of this. Whatever basis you work on is fine so long as it’s papered the right way.
The interesting dynamic as part of that was that the firm certainly didn’t feel empowered to have any kind of back-and-forth with its suppliers on what the terms would look like. That’s understandable – they’re not huge and many of the suppliers they use are. But there is a disconnect here – the closest entity to the client; the one who decides what kit gets used and what doesn’t and who drives the price should really be in the driving seat at this more fundamental level.
If we believe that adviser/planning firms really are the sun around which the planetary suppliers revolve, this feels like one of the last big power shifts required to make that a reality. Well, a metaphorical reality, so not really a reality at all. You know what I mean. And because every action has an equal and opposite reaction, this would once and for all be the thing that would turn providers into contract takers rather than contract makers. Just an idle thought on a wet Wednesday.
- It’s really not cool to lie about client circumstances, as a couple of wastrels have just found out.
- I thought Andy Bell’s letter to the new FCA heidbummer about drawdown pathways was well worth a read. Pathways aren’t taken all that seriously, but have the potential to be quite disruptive.
- It’s the last few days of our annual State of the Adviser Nation census data collection. We’ve already bust last year’s sample size which is cool, but as I write we need 32 more responses to get to a Very Pleasing Round Number. Please would you help us? All respondents get a playback and other cool things. You can take the survey here.
- Our guest this week on HomeGames is the inimitable – in that you really don’t want to imitate him – Adrian Murphy of Murphy Wealth in Glasgow. He’s the start of a run of advisers/planners we have booked in for HomeGames over the next month or so, and we’re really looking forward to the session. Dig in here.
- Your music choice this week is a bit special. Fish – a proud son of Edinburgh and former Marillion singer – has just released his last ever record, Weltschmerz. I love it all, but there is one astonishing track on it which is inspired by him losing his mother to dementia. It’s pure, direct, without artifice and is the sort of thing the world needs more of right now, even if it’s not all that cheery. Leave your prog prejudices at the door and give Garden of Remembrance a go. The video’s beautiful too (and Covid-secure).
I’m on holiday next week, so will pick the feline I like least and have them do the Update. That, my friends, is real power.