Business models of the future

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An insight into what the regulators are thinking about and commercial considerations.

Headlines

Areas the delegates were interested in hearing about:

  • Evolution of markets and approach to fees
  • Challenges and opportunities in the value chain
  • Outsourcing solution and vertical integration - views and experiences  
  • Ongoing trends

Key issue and challenges

Vertical Integration:

  • Independence vs tied vs restrictive
  • FCA currently providing mixed messaging around vertical integration – appears to be in a state of flux. It stopped the setup of funds as believed it encouraged shoe horning
  • Vertical integration is important as gives access to fund flows
  • Need for an open book relationship
  • Role of the IA - does not have much to do with the unregulated service providers (which are coming together with distributors as a growing trend)
  • IFA market – what will their future role look like? Will they be cut out? How important are they in creating tomorrow’s clients / demystifying pensions rules?
  • Partnership models and regulatory risks – a belief that the advisory market is not ready for it
  • Industry has been disenfranchised by platforms – although platforms have to an extent been good smaller providers

Conclusions and solutions

What the regulators are thinking about:
Vertical integration was a focus for them two years ago, but they are now preoccupied by Brexit and not much has been followed through since – expects more to come as rhetoric beginning to come through. FCA are also interested in competition

Commercial considerations:
Superior returns are driven by economic surplus—not value added or closeness to the customer and trust and brand dilemma is another Vertical integration challenge.


Owen James Group

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