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THE TOP CLASS WEDNESDAY UPDATE IS SERENE, COURAGEOUS AND WISE

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So I’m writing this at about 10pm on Tuesday night, trying to work out whether to bother staying up to see the first of the results come in. Looking at my diary tomorrow I suspect the answer is no. If you did I hope you got what you wanted. Personally I’m torn, as the last thing I want is the orange buffoon to come and spend more time at his golf courses in Scotland. I think he might do less damage in Washington D.C.

No, not really.

Also I need to be sharp at the time you’re reading this, because we are #delighted to launch the third in what I’m now calling The Lockdown Papers today. If you’ll forgive, this paper is our subject for today’s Update.

It’s called – take a deep breath – Serenity, Courage, Wisdom – disruption and innovation in retail investment pricing. I have heard of snappy titles and want no truck with them.

The paper looks, perhaps unsurprisingly, at how pricing in retail investment, across advice, platforms, portfolio managers and asset managers might change in the next five years. We identify 13 forms of innovation and disruption (which aren’t the same thing, and Clay Christensen says we need to learn to tell the difference) and score them for likelihood and impact.

Along the way, we have a think about how much has changed since RDR and how far we’ve come. Without giving it away, ‘not that far’ is our conclusion. Just like in 2010, clients meet with an adviser, get some advice which normally carries an ongoing percentage charge and invest in a range of funds charging a flat percentage inside a product which charges them a tiered percentage of their assets. It all feels like it’s been a lot of work for not all that much.

The idea of the paper is that we need to understand (and be serene about) things that just won’t or can’t change. Innovation for the sake of it is, as my sainted father likes to say, farting against thunder. We need to have courage to change the things we can. And we need to be able to tell the difference, which takes wisdom. That right there is the Serenity Prayer, and that’s our theme.

There’s lots of detail in the paper about how things look at the moment and where they might get to. I lace concrete boots up at one point and make predictions on ‘target price’ for 2025; the only reason I’m not worried about looking silly then is that I suspect we will be crawling across blackened glass and eyeing each other up as potential food sources by then.

But maybe the most important bit of the paper is that when we count the scores, we’ll find that adviser and planners won the last decade. In effect they have stood rock steady, as the winds howled around them. And as that wind subsides, what we find is that the industry is just starting to reshape itself around the profession. This is exactly as it should be – those closest to the client should be driving the way the industry works.

As I wrote last week, for a long time advisers have been price-takers: you may be able to achieve some discounts by promising volume to platforms and providers, but that’s it. What we predict in this paper is that you will become price-makers; creating bespoke propositions from a new generation of options and flexibility which the industry will seek to offer you. And in doing so, you’ll become contract-makers rather than contract-takers; this is the final, vital step in genuinely putting the adviser and client at the heart of the whole sector.

The paper is completely free to read thanks to the sponsorship of Multrees Investor Services, Orbis Investment Management and Sparrows Capital, all of whom are doing their own bits in terms of pricing innovation. Big thanks to all of them.

I enjoyed writing this one; it follows on the heels of our other Lockdown Papers on due diligence and centralised investment propositions. Why not read them as a set and really get to grips with the fundamental futility of existence? It beats staring into the void, that’s for sure.

You can read the paper (and download it) free of charge here (opens online flipbook).

LOCKDOWN LINKS

  • This isn’t the only paper we’ve launched this week. We’re also proud to have worked with the stalwarts at the AIC on the practical implications of including investment companies in CIPs. It’s more fun than it sounds. Again, you can read the free online flipbook here.
  • It’s all lang cat stuff this week, sorry. But #HomeGames is going to be an absolute stormer this week. Steve is interviewing Kathryn Knowles of protection specialists Cura in what promises to be a frank, revealing and genuinely affecting session. Please come and join us here, or catch up on YouTube later here.
  • Our friends at BWD have an interesting session on FCA fees tomorrow, which should be good despite Mike being on it. Justin Cash chairs. 12.30pm, here. Worth a look if you aren’t planning to check out the Intelliflo #CTG2020 conference at which I’m singing for my supper. Either way we’ve got your day covered.
  • And your music choice this week was going to be something serene, but where’s the fun in that? If this isn’t a time for Prophets of Rage agitprop then I don’t know what is. Don’t watch if easily offended.

See you next week

Mark

Posted in: #Top Class Wednesday Update  

About Mark Polson

lang cat founder and boss. Expert on all things platforms, pensions and investments. Prolific writer and public speaker, even when people ask him not to be. Knows more about Scandinavian black metal than you, and isn't afraid to prove it.