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