It’s a jungle out there - CEO sentiment as expressed in the run up to A Meeting of Minds Advisory Distributors

16 June 2016Evie Owen

Advisory DistributorsPiece of Mind

In the run up to A Meeting of Minds, we encourage our participants to open up! And according to the incredibly scientific index which we produce every six months, sentiment this June is quite a bit lower than it was last November. It has dropped from 8.00 to 7.73. It could be the uncertainty surrounding the EU referendum, or it could be that these CEOs of the nationals, networks and consolidators are not as upbeat as they perhaps could be!


Their biggest concerns are around the reducing number of financial advisers and the lack of new entrants. It’s holding them back. “How can you grow your business with significant competition for quality financial planners and paraplanners?”

Other headache causing issues: the introduction of technology – marrying up legacy business with modern practices; competitive pricing (Ed: maybe healthy?); concerns around roboadvice and guidance and how it is being portrayed as advice. Lawdy – it’s a jungle out there!
All set against a climate of uncertainty surrounding the political process and the resultant volatility in the markets … oh and low growth and non-existent inflation!

However our team are not shy retiring wallflowers, they can always muster up a few strengths when carrying out the old SWOT analysis: their people, their proposition, their reputation and their resilience. On on I say!! There is also a sense of increasing professionalism, experience, knowledge, productivity and profitability, all within a respected regulated environment.
The “W” is a sense of frustration at the lack of agility within the industry. Achieving scale is an issue. However they are upbeat at the potential to hoover up the opportunities left by those unable to survive in the new world – one door closes and another opens!
Oh lawd – and I thought the issue of regulation was just becoming a hygiene factor …. But oh no – it’s still huge and not in a good way. It’s the only story in town really.

Lots of talk about the alleged “inconsistencies and ever changing burden of regulation”. It’s the ultimate challenge: how to achieve “profitabiity with the need to deliver great customer outcomes through a compliant approach.”

In terms of valuing adviser businesses, there has been a notable shift over the past six months - the growing importance of a high proportion of recurring revenue. The importance of the client base and its portfolio size is also becoming more important as is the strength and ambition of the management. A scalable business model is dropping down the priority list, presumably because our respondents will offer that scalability upon acquisition. Sweet.

We then talked about compliance and for the first time ever, we asked them how much they spent on this area. We were quite surprised by the range. And much as I checked it, I couldn’t understand why those spending under 5% last year expected the costs to increase next year, whereas those who spent between 5% and 10% expected their costs to decrease … either way there are people spending over 40% of their costs on compliance. Maybe we need to tighten up the question? For the record under 5% of revenues are spent on levies to the FSCS – still quite a lot though!

Our firms don’t do a lot of work with corporates, their emphasis is very much on the individual. I suppose they leave it to the employee benefits bods. But surely there is some potential for a bit of cross-selling which is slipping through .We noticed our other group – the Winning Advisers – typically £200M FUM - increasing their involvement in the corporate world …

And finally some headline numbers: on average firms represented have more than 16,000 clients each; an average of 228 appointed representatives and 642 directly authorised advisers And our audience at the Meeting hold responsibility for something like £125BN – definitely worth getting out of bed for. 

Some 60 “C” suite participants representing the nationals, networks and consolidators will come together with other industry experts to address the key issues affecting the industry for the 21st Meeting of Minds Advisory Distributors on Tuesday 28 June at Tylney Hall, Rotherwick, Hook, Hampshire RG27 9AZ. If you would like to get involved, do please call us on 01483 861334.