Expert: Mark Hopcroft, Head of Strategic Partners, Timeline Facilitator: Rod Bryson, Tata Consultancy Services
Headlines:
- The challenges faced by firms in navigating pricing dynamics while fostering a value chain that aligns with evolving client needs and regulatory expectations
- The downward pressure on asset management fees due to increased transparency and competition
- The difficulty in controlling advice fees, the potential impact of the consumer duty on pricing, and the role of technology and AI in driving efficiency and cost reduction
Discussion points:
Consumer behaviour and pricing awareness
The level of consumer awareness and price sensitivity in the financial services industry was discussed with some arguing that clients are not particularly price-conscious when it comes to advice fees, as they prioritize trust and perceived value over cost.
Others suggest that increased transparency and the ability to compare prices have led to downward pressure on asset management and platform fees, but not necessarily on advice fees.
Regulatory impact and the consumer duty
The role of regulation in influencing pricing dynamics and the impact of the Retail Distribution Review (RDR) on unbundling fees and increasing transparency, as well as the potential implications of the upcoming Consumer Duty on assessing value for money.
Technology and efficiency gains
The potential for technology and AI to drive efficiency gains and cost reductions in the advice process. It was debated whether these efficiency gains would translate into lower fees for clients or increased productivity for advisers.
The role of digital platforms and automated investment solutions was also mentioned.
Pricing Models and Value Propositions
Perspectives on different pricing models and value propositions in the industry. Topics include tiered pricing based on service levels, the potential for transactional versus relationship-based charging models, and the challenges of justifying fees for clients with varying asset levels.
The consolidation of active fund managers and the impact of passive investing.
Key takeaways:
- Closely monitor the implementation and execution of the Consumer Duty, as well as any related consultation processes, to assess the potential impact on pricing and the advice gap
- Explore the adoption of tiered pricing models based on service levels, allowing clients to choose the level of service and corresponding fees that align with their needs and perceived value
- Evaluate the potential for technology and AI solutions to drive efficiency gains in the advice process, and determine whether these gains should translate into lower fees for clients or increased productivity for advisers
- Assess the firm's value proposition and pricing model in relation to the evolving needs and expectations of clients, ensuring alignment between fees charged and the perceived value delivered
- Stay informed about industry trends, regulatory changes, and market dynamics that may impact pricing strategies and the competitive landscape
