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Positioning for the future in an industry where uncertainty rules

22 August 2019

By Cathi Harrison, managing director, Apricity

Two contradictory headlines sitting side-by-side tickled me recently – one saying that the platform market needs to shrink and the other announcing the launch of a new one.
It is, however, very common in financial services, and indicative of the industry as it stands that, to put it bluntly, we have no idea what’s going to happen next.
A huge amount of column inches / blog posts / news articles are dedicated to what we think might be coming up. Many firms are now making the move to clients paying fixed fees directly, away from a percentage basis out of policies, on the belief that this might be something that is mandated in future by the FCA… and better to be ahead of the curve, right?
And they may be right, and have positioned their business in such a way that they can get a competitive advantage on any such big changes, and in the meantime their clients are getting complete transparency… assuming they can afford to pay these fees direct.
We’ve all seen the firms that have made this type of business call, and are now insisting everyone else follows suit. That everyone who hasn’t yet done this is ‘wrong’ and ‘bad’. They want to start the movement and hope enough people go the same way to reinforce that way of working. (As a deeply-psychological-for-a-Friday side note, is the aggression shown by some advisers, when everyone won’t just work the way they do, a consequence of the insecurity instilled by an ever-changing industry?)
But what if others don’t replicate that way of working? And what if this change is never mandated? And what if all they’ve done is cut out a huge number of clients who can’t afford to work that way, and made their lives more difficult and their businesses less profitable in the process?
I’m playing devil’s advocate here – the fact is, we don’t know how that model will work out. And that’s the point. I can’t think of any other industry that has such uncertainty over its own future.
There’s inevitable ongoing change in finance, with tax and regulatory updates several times a year and, to be honest, it’s one of the things I personally like about financial services. It keeps it interesting. I imagine if I was working in, say, contract law, there’s only so much I can learn, the law isn’t updated bi-annually, and it might not be as stimulating on a day-to-day basis. So, that bit is fine.
It’s the fact that no one knows what the future landscape will look like, or what rules will be placed on them for running their businesses, that feels an extra level of challenge.
It’s one thing to keep ahead of legislative changes for your clients. But to have to constantly be questioning your business model and, worse, trying to plan ahead to keep a successful, profitable business going (difficult at the best of times) in a constantly changing environment, makes financial services a very unique industry…

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