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.
