On the basis that you should never "let a good crisis go to waste", the best opportunity to really demonstrate your value is at a time of market uphea

Expert:         Paddy Lewis, Partner, Sionic
Facilitator:   David Edwards, Marketing Manager, Principality Building Society 

The State of Play

Both the FCA and clients and WE want to know….. 

• As an industry, you have spent the last few years grappling with margin, achieving growth, and introducing new technology. The latter being the key driver of the first two. And then came COVID: margin, growth and technology were no longer such clear-cut issues.
• However, now that we have all caught our breath, the issue of providing value for money still stands but set against a different backdrop
• Have you changed the way you engage with clients as a result of COVID? - Anticipated response yes! - Hygiene factor
• Have you changed key processes and systems as a result of COVID? - Anticipated response yes! - Necessity driving change. The Poll - Have you changed your approach to charging as a result of COVID? - leading on to debate on how value chain.....85% said no (tbc) 

Findings Summary

• The COVID pandemic has brought into focus the challenges of delivering client led value propositions, some of which have been on the horizon for some time.
• The recent forced changes in business practices because of the pandemic have meant firms investing in new technology and changing the way they engage with clients.
• In addition, the cost pressures for distribution businesses and wealth managers in delivering advice and investment strategies are also coming under increased challenge by clients, competitors, and the regulator.
• However, feedback from the session identified that firms have been focused on tactical changes to business process and the adoption of new technology to support remote working as opposed to evaluating the value chain in its entirety.
• The financial planning service is universally recognised as being the most valuable element to their clients. Building trust and relationship with clients is key and this service remains the most “enjoyable” and rewarding part of the financial planning experience for both clients and advisers.
• However, many firms remain focused on trying to deliver a ‘bespoke’ centralized investment solution without challenging the costs and risks this brings to their business. Vertical integration remains high on the agenda.
• There were some examples of firms adopting fixed fee models and client charging structures that relate directly to the planning services they provide.
• However, some firms are struggling to see how they can transition to this model where simple and/or low value investment solutions are in place and there is less requirements to actively manage or monitor the client portfolio.
• HNW clients are also more inclined to value the planning process, although the ‘lifechanging’ experience of the last six months has initiated more client discussions to create a robust financial plan.
• The delegates also highlighted the value of firms offering add-value services such as tax and estate planning to HNW clients and importance of engaging with next generation clients as part of this process.
• The topic of firms introducing a ‘subscription model’ to support the adoption of new and lower value clients was also raised with some firms ‘piloting’ this approach and exploring new ways that technology will support this process.
• A key finding was that there is a slow move away from the traditional segmentation by client value e.g. AUM although a number of firms are looking at segmentation based on the ‘new’ demographics based around clients behaviours and preferences.
• The introduction and adoption of technology to support changes in business models remains a key focus for many. The use of video conferencing for client meetings has become a hygiene factor. Other examples of technology adoption included centralized document management systems where both clients and advisers have secure access, digital investment execution and legal services. Client portals were also seen as important.
• In summary, the delivery of a value-led propositions to clients remains a key focus for most businesses and an opportunity to have a USP for many.
• However, the transition from traditional investment implementation practice and to a planning centric, services orientated practice has only just begun.
• Technology will help to bring about greater change and at pace. Increased consolidation activity in the wealth management space, where economy of scale, will also be the driver of value for all parties.