Posted Thu 1 Mar 2018
"It’s been a little while since I was a CEO, but I thought it may be interesting to reflect on what I would be thinking about today if I were, again, the CEO of a Wealth Management/Life business.
I was often asked who my key customers were, and I was always very focused on the clients who ultimately entrusted us with their money and the advisers with whom they often interacted. I always tried to look at my business through these lenses: the customer and the adviser.
Today’s customer has moved through the phases of being confused and concerned to reach a stage of relative cognoscente when interacting with their money. They are less binary about that interaction and are prepared to serve themselves for simple product whilst fully recognising the value of advice in the more complicated arena. Indeed, those complicated arenas themselves have become even more so in the recent past, thus driving an unprecedented demand for the product of advice.
The perspective of the adviser has also altered significantly, particularly in a post Retail Distribution Review (RDR) and Pensions Liberalisation environment. The post RDR product has become advice rather than the wrapper, which was often the case pre-RDR. Some may argue that this is a direct result of the remuneration structure revisions in the RDR and that is undoubtedly true to a degree but is not, I feel, the only driver. Pensions “liberalisation” (and – to an extent – Defined Benefits (DB) transfers) have created a whole new at- and post- retirement advisory regime. No longer is the purchase of an annuity remaining as the only solution. The “Drawdown “and “Phased Retirement” approaches demand much more continuing contact and intimacy between adviser and client long into the decumulation phase. This requires a fundamental shift in thinking across many areas of the typical Wealth Management business.
So, what does all this, and much more than this article permits, mean to me as the reinstated CEO?
Research constantly evidences the fact that the key determinants of choice by both customer and adviser are price and efficiency. I would argue that the former is largely a function of the latter. Operational excellence in all of its facets would be a key concern for me today. I firmly believe it is a differentiator rather than a utility and I would be applying a lot of my thinking, and budget, to seeking the best and most sustainable operating model I could create.
An essential ingredient to my thinking would be the growing impact of “digital”. It is almost impossible in the wealth business now to think of an operating model that does not have a digital layer, or indeed many digital components. The tenet that “digital is in everything“ is rapidly becoming an oft-quoted business mantra and one I firmly believe in as it is key to both enhancing the customer experience and improving the efficiency of the operating model.
In my list of key customers, I omitted one which I spent a lot of time thinking about – the Regulator. So much of what wealth businesses do is driven by regulatory imperatives, and at this point in time, there are a plethora of regulatory items on every CEO agenda. Things such as MIFID, GDPR, SMR etc. drive a good portion of every board meeting of every wealth management business. It is hard to create competitive advantage in this area but the consequences of a less than rigid regulatory compliance regime can damage the balance sheet and reputation of even the most solid institution.
During the everyday life of a CEO, issues emerge which demand focus but the core themes I have referred to in this piece tend to remain as constants in the modern Wealth Management business."