Well, it’s very tempting to get distracted by events and make this week’s Update about American politics because I’m a political junkie and seeing the big orange baby getting his report card with a big L on it is delicious. But, grudgingly, and just as I try to teach others, one should write with one’s reader in mind, not just spaff whatever’s in your head at that moment onto the page. To all those saying: “isn’t that exactly what you do most weeks?”: shut up. I’m locked in. Total focus.
There’s lots going on this week, not the least of which is this DWP consultation on guided retirement. A huge change for members of DC schemes, whether contract- or trust-based, and potentially a big step towards improving outcomes at a key stage for folk who fall into the advice gap, which I wrote about SO POWERFULLY last week when you were all ignoring me.
You’ve got till just before Christmas to respond, and while most of you reading this will correctly determine that this ain’t aimed at your full-on planning clients, if you view it as a package along with auto-enrolment, targeted support, the pensions dashboard and pathways, you get a better sense of where things are heading. I was at a Thing yesterday marking the 20th anniversary of A Particular Platform, and one of the things that the greybeards commented on was that client profiles on platforms have changed hugely; now the pension wrapper is routinely dominating clients’ total holdings whereas back in the day it was chunky-monkey GIAs.
It was a matter of no small shock to me that it turns out I’m one of the greybeards now.
So if you’re the kind of firm who’s thinking about an offer for less affluent clients, maybe not at early accumulation stage but at or close to retirement, this consultation is definitely worth your time; the biggest liquid asset most people will ever have is certainly under the microscope. Mind you, it’s just a consultation at the moment, and so we can probably look forward to guided retirement options in 2037 or some such.
Also catching my eye this week is this piece from Citywire’s Secret PE Consolidator. I like these columns, particularly because they always make me think of some dude standing up on a chair at an industry event and proclaiming “IT’S ME! I AM THE SECRET PE CONSOLIDATOR!” as everyone stares uncomfortably at the floor or their phone and the moderator onstage says “sir, this is a session on cashflow planning, are you sure you’re in the right place?”
Whimsy aside, there’s some interesting stuff in here, and taken to its logical conclusion should be a wake up call for many businesses, either those who are acquiring or those who have allowed the money truck to back up to their front garden. I have lost count of the number of acquired firms I’ve talked to who’ve said “it’s great, there’s really not much difference, they bought us because they like what we do and it’s no change”. I hate to be the bearer of bad news, but that streak may be coming to an end, rather like another, more orange streak across the water.
I’ve long thought that the true measure of a consolidator isn’t AUA, or number of deals, but the strength of the covenant that they have with their firms. That might exist in the legal chokeholds, but as we’ve seen lately some individuals are happy to roll the dice and see just how committed consolidators are to protecting themselves. The winner of all of this will be firms who can create a centripetal proposition; one which attracts firms and advisers within those firms with genuinely good propositions rather than ones which prioritise clipping the ticket that little bit more over client outcomes. Harder to measure; much more powerful.
And with that I’m off to mainline political stuff a bit more.
Your music choice – well, Mike suggested Orange Crush which is both funny and appropriate, two things rarely associated with him. So you can have that one, and from me I think it’s going to be Starless by A Perfect Circle. When I grow up I want to play guitar like Billy Howerdel.
That’s it; Steve has Big Things to tell you about next week so he’ll Update you then.
Mark
