Changing requirements for adviser businesses put pressure on everyone, but these changes could create winners and losers in the advice world in particular, as well as the wider insurance sector in general. Some advisers will identify opportunities while others will find the pressure overwhelms them – and so they will make a decision to leave.
I am concerned that rushed change, often poorly designed, could damage the market. That worry applies not just to legal and regulatory change – such as a Supplementary Order Paper running to well over 100 pages – but also to industry reaction to the new law. I am particularly worried about reducing the supply of advice to clients and pushing some out of the advice sector.
But you may also find great opportunity in change. Could that be you?
The advice business that is more likely to succeed will have one or more of the following characteristics:
• A strongly defined advice service with clear value to the customer
• Strength (or scale) in a particular territory
• Well-organised marketing processes, and some experience of marketing automation
• Compliance assurance processes that provide evidence to managers of good adherence to advice standards
• Good governance processes, with effective oversight of how advice is given, how insurance providers are selected, and how clients are served
• Access to capital
• Most of all: an optimistic frame of mind about the opportunities that may emerge
Of course, even the best advice businesses usually need to work on one or more of these, and most need to do some work in each area.
Transplanting investment-focused advice processes to an insurance or mortgage advice business can fail – because the importance of the emotional connection to the client, their need for cover, and knowledge of insurance products is lacking.
Forcing your advice into a process designed by a technology provider can fail too – because systems design isn’t the same as service design. The problems of failing to focus on the customer and their journey through the process of purchasing advice is often lacking.
Taking time to work on these areas of your business is vital, however, because:
• If you know you have strong advice processes, a good compliance assurance plan, and good governance, you will have nothing to fear from the new compliance regime
• If you have good systems, scale, and operational efficiency then you can cope better with any changes, and also look for growth opportunities
…and there will be opportunities to grow – if you understand your balance sheet and have access to capital, you may be surprised at the opportunities available over the coming years.