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AIM High: The changing UK advisory market · Two in Twenty

• 0:02
  SPEAKER_01: Hello and welcome to the Aim High podcast.
• 0:04
  SPEAKER_01: My name is Twink Field.
• 0:06
  SPEAKER_01: I'm the CEO and founder of a company called White Marble Marketing, which is a marketing company that specializes in financial services.
• 0:13
  SPEAKER_01: And this podcast is dedicated to marketers in financial services.
• 0:18
  SPEAKER_01: We are having conversations with a range of experts talking about the industry, about product, giving practical tips as well as talking about personal development for careers.
• 0:31
  SPEAKER_01: Today we are talking about the UK advisory market, helping marketers understand that market a little better.
• 0:40
  SPEAKER_01: And I'm joined today by Heather Hopkins, who is the founder of NextWealth, which is a company that works with clients through consultancy, research, thought leadership, helping to anticipate and adapt the next thing in wealth, I guess.
• 0:55
  SPEAKER_01: And Fergus McCarthy, he's the UK distribution director at Standard Life Aberdeen, providing solutions to the whole of the UK intermediated market.
• 1:05
  SPEAKER_01: So I'm delighted to have two great guests with me today of such caliber.
• 1:12
  SPEAKER_01: Hi, good morning to you, Heather and Fergus.
• 1:15
  SPEAKER_01: Thank you for joining me today to talk about the UK advisory market.
• 1:19
  SPEAKER_01: I think maybe the best way to start is for both of you just to give a little bit of a summary as to who you are and what you do.
• 1:27
  SPEAKER_01: And I guess for that reason your authority on the UK advisory market.
• 1:31
  SPEAKER_02: Great to be here.
• 1:32
  SPEAKER_02: Thanks, Twink.
• 1:33
  SPEAKER_02: So I run a research and events business called Next Wealth.
• 1:38
  SPEAKER_02: You'll probably tell from my accent that I'm Canadian.
• 1:41
  SPEAKER_02: I've spent my career in market research.
• 1:43
  SPEAKER_02: And the things we focus on is just understanding what's happening in the advisor market and thinking about how that influences up the supply chain in retail investing.
• 1:53
  SPEAKER_02: Fantastic.
• 1:55
  SPEAKER_00: Hey Twink, great to be here.
• 1:57
  SPEAKER_00: Thank you.
• 1:58
  SPEAKER_00: So yeah, so I've been in the industry now for 23 years, and in those 23 years, always dealt with advisors.
• 2:05
  SPEAKER_00: So I feel like I've sort of not quite grown up with them, but certainly been alongside them for the last 23 years.
• 2:10
  SPEAKER_00: So always in distribution roles and culminating my latest role, which is as UK distribution director for Standard Life Aberdeen.
• 2:17
  SPEAKER_00: And in that regard, a relatively unique role in this, I look over both platform and investment for the first time in my career, both of which are integral to what advisors and investors do in the market today.
• 2:30
  SPEAKER_01: Brilliant.
• 2:30
  SPEAKER_01: Okay, so maybe that's a great place to start, particularly with 23 years of experience.
• 2:36
  SPEAKER_01: I think for any marketer coming in and needing to understand the UK advisory market, I guess you've always got to understand where your clients have come from, what journey they've been on.
• 2:46
  SPEAKER_01: So maybe we could talk about the sort of yesteryear of sort of trail commissions and sort of pre-RDR, just to give context, I guess, to some of the drivers that have kind of really you know put change into the industry and uh maybe give some context to some of that.
• 3:01
  SPEAKER_00: Yeah, no, absolutely.
• 3:02
  SPEAKER_00: I think the the key thing is that the is is the size of the industry has changed.
• 3:07
  SPEAKER_00: So I think when I started, I think we talked about having 50,000 advisors in the UK.
• 3:12
  SPEAKER_00: I think the latest figure we talk about is 25,000.
• 3:14
  SPEAKER_00: So in the 20 years, we've seen half the number of advisors now in our population that we did have 20 years ago.
• 3:20
  SPEAKER_00: And I think as well, we've had a breadth of regulation that has meant that, if I can use the word, has more professionalized the industry.
• 3:28
  SPEAKER_00: And so I think you've seen a focus from what was traditionally probably quite a transactional process in terms of selling products to actually what is now more of a sort of a financial planning holistic journey when talking to clients about um investment products and platforms and and so forth.
• 3:43
  SPEAKER_00: Um, and so I think it's thinking about um if you're looking at that in terms of where we've come from, is thinking about, you know, we had a very big market.
• 3:49
  SPEAKER_00: Um, we have very traditional, sort of what I would describe as marketing in terms of it was very press-led, in terms of actually there were, I remember billboards at stations, um, in sort of advertising investment products.
• 4:00
  SPEAKER_00: And whereas I now I think we've we've moved completely on from there into a more digital world where you know we have this breadth of data everywhere, it's easier for people to self-serve.
• 4:09
  SPEAKER_00: I think the other thing you have to think about is actually the natural move of that journey, which is that those people 20 years ago were of a certain age running their own businesses, and they're now of a different age.
• 4:20
  SPEAKER_00: And I think it's thinking about actually how do we serve them in terms of how they consume information, I think is the really key thing to think about from a marketing perspective.
• 4:28
  SPEAKER_01: Yeah, I think that's absolutely right.
• 4:30
  SPEAKER_01: Maybe get stuck into that in a bit more detail in a moment.
• 4:32
  SPEAKER_01: Heather, would that be in terms of the market seemingly halving from 50,000 to 25,000 to Fergus's point, um, you know, the sort of professionalizing the kind of increased sophistication, is that something that you have seen within the market in terms of the advisors that are sort of now uh building their businesses and sort of seeing some revenue growth?
• 4:52
  SPEAKER_02: Yeah, absolutely.
• 4:53
  SPEAKER_02: It's uh it's a it's a really interesting market.
• 4:55
  SPEAKER_02: So 26,000 advisors, but 5,000 firms, right?
• 4:58
  SPEAKER_02: So it's so it's a lot of small businesses.
• 5:01
  SPEAKER_02: I think it's 89% have five or fewer advisors in the business.
• 5:05
  SPEAKER_02: The median number of staff is eight.
• 5:07
  SPEAKER_02: So these are really small businesses, really fragmented.
• 5:11
  SPEAKER_02: And the most profitable businesses and the ones that are growing revenue per advisor most quickly, are actually the smaller ones.
• 5:18
  SPEAKER_02: So there's a lot of talk about consolidation, but we haven't really seen that take off.
• 5:23
  SPEAKER_02: I think one of the really interesting things about the retail investing industry, so thinking about it more broadly, is that if you look at most markets, they have seen transformational change over the last few years driven by customer preference and technology.
• 5:40
  SPEAKER_02: In our industry, the change has been forced by the regulator.
• 5:44
  SPEAKER_02: And we haven't seen that customer-driven change yet, and it's not sure that we will.
• 5:50
  SPEAKER_02: And I think that's a really important context to have that the the big challenges that advisors are facing are about PI premiums, and that's a lot driven by regulation.
• 6:01
  SPEAKER_02: It's about the pace of change of regulation.
• 6:03
  SPEAKER_02: They talk about moving goalposts that they feel like they don't know if what they're doing today will be compliant in the future.
• 6:09
  SPEAKER_02: And and and it's and that's what advisor businesses are really struggling with.
• 6:14
  SPEAKER_02: There's definitely been, I mean, to Fergus's point, a professionalizing of financial advice businesses.
• 6:19
  SPEAKER_02: We were really pleased in a recent piece of work that we did to find that 44% either have or are working towards chartered status.
• 6:26
  SPEAKER_02: And that's a that's a real marker of a high bar for professionalism and a focus on financial planning, on client outcomes, and on customers.
• 6:36
  SPEAKER_02: Um so we're we're really pleased to see the evolution of the advisor market, but yeah, definitely towards professionalizing, but still struggling to run what mostly are small businesses.
• 6:46
  SPEAKER_00: Yeah.
• 6:47
  SPEAKER_00: And I think that's that's a that's a great point because I think that that struggle you you get comes across really loud and clear, which is actually that you know that these are small businesses and regulation is a real struggle for them in terms of actually the amount, the pace of change, the amount of change.
• 7:00
  SPEAKER_00: And and you know, I think there are businesses providing services now, compliance services to help firms cope with that change.
• 7:08
  SPEAKER_00: And again, I think if you're if you're thinking about you know, from a marketing perspective to this audience, you've really got to think and understand, you know, what's driving these people on a day-to-day basis.
• 7:16
  SPEAKER_00: What do these people care about?
• 7:18
  SPEAKER_00: What keeps them awake at night?
• 7:19
  SPEAKER_00: And I think that's absolutely how do I cope with regulation?
• 7:22
  SPEAKER_00: Because Heather makes the point, you know, some of these businesses are great businesses, very profitable businesses, but they look at this regulatory change and PI changes and thinking, you know, where's the future here?
• 7:31
  SPEAKER_00: So I think it's really key to think about kind of what keeps these people awake at night, thinking about their businesses and how we can maybe help in that regard.
• 7:38
  SPEAKER_01: Absolutely.
• 7:39
  SPEAKER_01: And I think to the point around, you know, trying to, within that environment, try to have a profitable small business and to adapt to change and not allow all your resource to be absorbed into that change.
• 7:50
  SPEAKER_01: I imagine that's driving some of their decision making, some of the choices that they make around the partners' compliance or otherwise, as well as maybe some of the investment solutions they're looking to put into their offering.
• 8:01
  SPEAKER_01: So maybe we can just touch a little bit on how that has changed in terms of the service that the sort of advisor now provides to their end investor and almost the makeup of their of their offering.
• 8:13
  SPEAKER_00: And and Heather's done some great work on this, so she can talk to some of the points in it in a second.
• 8:17
  SPEAKER_00: But I think, again, back to that point in terms of regulatory change leading this.
• 8:21
  SPEAKER_00: And I think what you saw post the retail distribution review is the introduced the introduction of risk profiling for the first time.
• 8:27
  SPEAKER_00: And so I think what you had was a framework there for which advisors were, you know, um requested and instructed to use for their clients.
• 8:35
  SPEAKER_00: So the starting point now for a client conversation is you know, sort of what are your needs, aspirations, what are you looking to achieve when it gets to the investment conversation?
• 8:41
  SPEAKER_00: It's then well, what is your attitude to risk?
• 8:43
  SPEAKER_00: And that attitude to risk, I think, was key in terms of some of the developments we've seen since then in terms of the growth of multi-asset use or indeed fund of funds, depending on you know whether you're independent or restricted in terms of your permissions.
• 8:54
  SPEAKER_00: And I think what advisors have done is really looked for what is probably the most in terms of the proposition from an investment perspective that delivers the best outcome for clients, but equally for them satisfies their regulatory obligations as well.
• 9:06
  SPEAKER_00: And so I think what you've seen is this sort of this real growth in the use of sort of multi-asset, multi-manager solutions.
• 9:14
  SPEAKER_00: And yet, you know, you you've got that at one end, but you've still got people putting together portfolios at the other end as well.
• 9:19
  SPEAKER_00: Um that's perhaps something that you know Heather can you pick up in the it's really it's really tricky, isn't it?
• 9:25
  SPEAKER_02: Because it's what it's it's the so most advisors use multi-asset, multi-manager, but then when you ask them for the proportion of assets, the largest proportion of assets sit in build your own models.
• 9:36
  SPEAKER_02: And and I think it's a really interesting challenge for marketers because we talk about the centralization of um of choice of funds and it's shrinking to a smaller and smaller number of gatekeepers.
• 9:46
  SPEAKER_02: But but what we're seeing is that there's central influence, but local choice.
• 9:50
  SPEAKER_02: And so there's a so there's this shift, we talk about the institutionalization of retail, where retail is looking a bit more institutional in terms of pricing and how decisions are made, and that's all part of professionalizing financial advice because rather than going whole of market choosing whatever you want to do, you choose from an agreed panel or whitelist that's agreed centrally.
• 10:11
  SPEAKER_02: But the the individual advisor who's meeting with the client or the power planner, if they're implementing the plan, is choosing the platform, the product, the fund that's that that's put into that client's portfolio.
• 10:26
  SPEAKER_02: And so there is definitely this rise of central influence, but I think um I think we've overlooked the importance of local choice in the last few years.
• 10:34
  SPEAKER_02: And and that is that's where marketing plays such an important role because reaching those 26,000 advisors out in the field is really hard for shrinking sales teams, with which Firk you're talking about.
• 10:48
  SPEAKER_02: Um, and that's and that's where marketing can play a really important role in terms of events and reaching people in their offices.
• 10:54
  SPEAKER_00: Yeah, and that that terminology I love because that that Heather's absolutely right.
• 10:57
  SPEAKER_00: That central influence, you know, local choice, I think is really key.
• 11:00
  SPEAKER_00: And yeah, I think absolutely as marketeers, you have to think about you know, how do we influence those central influencers?
• 11:06
  SPEAKER_00: And then equally how do we capitalise in terms of the people making those local choices?
• 11:09
  SPEAKER_00: And absolutely to Heather's point, you know, you know, in a world where sales teams are getting smaller, not larger, um, you really need to find that symbiotic relationship with marketing, which is, and I describe it as you know, marketing being the voice when we're not there.
• 11:20
  SPEAKER_00: Um, so they're the voice of sales when we can't be in the room.
• 11:23
  SPEAKER_00: And I think that's really key in terms of actually, and then it's understanding, okay, where are those people going to get that information and how can we then serve content to them in the best way possible that actually helps them, you know, making the investment choice in terms of making those local choices.
• 11:36
  SPEAKER_01: And I think also, um, Dorothy, part of the mix has to be brand.
• 11:41
  SPEAKER_01: I think sometimes we can forget the influence that familiarity with brand can play.
• 11:47
  SPEAKER_01: Um, I think we all get very caught up in how do we sort of look at our strategic priorities across the product set, etc.
• 11:54
  SPEAKER_01: And again, back to the thinking around what's the customer journey like?
• 11:58
  SPEAKER_01: How are we kind of helping them do their job?
• 12:00
  SPEAKER_01: And part of that is understanding better what we offer as a house.
• 12:05
  SPEAKER_01: So maybe I don't know, Fergus, whether you could just talk a little bit about how uh you guys think about brand and working alongside your marketing colleagues to really sort of ensure that that's well understood amongst this audience.
• 12:17
  SPEAKER_00: No, happy to tweak.
• 12:18
  SPEAKER_00: And I think I think you're absolutely right first.
• 12:20
  SPEAKER_00: I think brand is is a particularly, I think we've we've almost done it a disservice in investment management.
• 12:25
  SPEAKER_00: We've almost kind of said, well, you know, brand doesn't really matter because you know they make the choice based on performance.
• 12:30
  SPEAKER_00: I think in a world where you're making a choice based on a client's attitude to risk and then you know risk profiling number, and actually thinking about then, well, what are the values I want in the investment company that I'm choosing?
• 12:40
  SPEAKER_00: Because to Heather's point, if you're making more of those local choices, but you're actually using less investment managers in your proposition, and conceivably, depending on what your proposition is, you could use only one or two multi-asset or multi-manager funds from two different houses in within your proposition if you wanted to.
• 12:55
  SPEAKER_00: Um, is thinking about that in terms of you know, more aligned to the brand within that, in terms of what does the brand stand for?
• 13:02
  SPEAKER_00: You know, what does what does the brand mean and bringing the brand to life?
• 13:05
  SPEAKER_00: And I think it's really sort of that for salespeople, particularly working with marketing, to sort of we should we should embody the brand.
• 13:10
  SPEAKER_00: What are our what are our brand values?
• 13:11
  SPEAKER_00: And let's be clear about that.
• 13:13
  SPEAKER_00: And I think you know, we've probably not done as as good a job as we might have as an industry articulating the values in our brand.
• 13:19
  SPEAKER_00: And we see the power of brands everywhere in our own lives.
• 13:21
  SPEAKER_00: You know, we're all consumers at the end of the day, we're all clients, we all see these global brands and actually what it means to us.
• 13:26
  SPEAKER_00: And I think if you've you know, if you can really sort of build that brand and instill those values, and actually you all communicate and talk about those values that the brand brings, then actually I think what you do get is then from those for those advisors, you're making life a little bit easier for them, which is okay, actually it's a brand I trust, I understand what they're about, and therefore I try to trust them to do what my client needs.
• 13:46
  SPEAKER_01: I think to the point around influence as well, and and the communities where um advisors are going to sort of read and research and to sort of gain knowledge, I think that is quite a fragmented picture.
• 13:59
  SPEAKER_01: I think it is really hard for marketers and uh distribution teams generally to get be right across that picture.
• 14:05
  SPEAKER_01: So I don't know whether you see anybody doing that particularly well in the market in terms of their approach and how they're demonstrating, I guess, their relevance, empathy, and understanding to this audience through their content and their branding and their sort of full marketing mix.
• 14:22
  SPEAKER_01: Do you do you have any comments on that?
• 14:24
  SPEAKER_00: Yeah, and I think it's I think so.
• 14:26
  SPEAKER_00: One of the things that we've seen, I think, really come to the fore the last three or four years in investment management is the formation of these content teams.
• 14:33
  SPEAKER_00: Um, so I was very fortunate to work um in my in with a BMI Mellon with you know um a content team that Amory McConnell put together.
• 14:40
  SPEAKER_00: Um I think we've seen a lot more firms now invest in that content engine.
• 14:44
  SPEAKER_00: So whether that's bringing in journalists to sort of write pieces or bringing in people to sort of fully stand up the sort of the content partnership piece.
• 14:51
  SPEAKER_00: Um, but I think it's really thinking about it's again, it's really thinking about, yeah, you can do content for content's sake and actually it's thinking about how is that content to your point, Twink, relevant to what I'm trying to tell the client?
• 15:02
  SPEAKER_00: And how does that content work in an educational way?
• 15:06
  SPEAKER_00: I think the key within that is the utilization of social media, and I think it's you know, in a very what is a very and we all know this, a very regulatory, you know, run sort of you know industry.
• 15:15
  SPEAKER_00: We're almost at a disadvantage versus some of our sort of non-financial companies because they can utilize social media to its full, whereas we have a natural barrier to using social media in the same way that other companies would do.
• 15:27
  SPEAKER_00: And I think the really clean, the really clever thing I think is in terms of for marketers is actually thinking about you know, how do I use social media intuitively and intelligently in the right way, where it's compliant but still allows me to be in that space where you know my salespeople can't be.
• 15:42
  SPEAKER_02: The other, I think the other thing to think about for marketers is to make the information easy for the advisor to use with their client.
• 15:49
  SPEAKER_02: Because I think there was a term that the regulator used in the RDR, the overcomplexification of financial services.
• 15:58
  SPEAKER_02: It's a very complicated word to describe, but um, but that's something that advisors are always looking for is material that they can use with their clients because they have to translate whatever they're given into terms their customers can understand.
• 16:11
  SPEAKER_02: So any consumer-ready material is really valuable for advisors.
• 16:16
  SPEAKER_00: Yeah, and I would I would wholeheartedly um endorse that because and and it's one of those things that I think is quite uncomfortable for most marketing teams to because you invariably I can have that conversation I have had with marketing teams, and the the answer is normally always, oh, we'll never get through compliance.
• 16:30
  SPEAKER_00: And it's kind of like, well, that shouldn't be the answer.
• 16:32
  SPEAKER_00: Yeah, we're trying to do something to Heather's point that ultimately will help the client and will help the advisor.
• 16:37
  SPEAKER_00: And one of the things that's actually the piece of the feedback is that it's true across the sort of the industry.
• 16:40
  SPEAKER_00: I mean, you know, Heather talked about the institutionalization of the advice market.
• 16:45
  SPEAKER_00: If we think about some of the private bankers and some of the big banks, the one of the feedback we get from them is we just want stories.
• 16:50
  SPEAKER_00: We just want stories that our private bankers can tell our clients.
• 16:54
  SPEAKER_00: And in telling them stories, we'll help them engage in investing, which ultimately should be for their long-term benefit.
• 17:00
  SPEAKER_00: And again, I think it's that it's that piece of, you know, we've I guess whether we've forgotten how to or whether we've ever been able to tell stories as an industry, and I think maybe as marketeers is thinking about, and salespeople even when we're sitting in front of clients, is how do we tell those stories better?
• 17:14
  SPEAKER_01: Yeah, I think that's absolutely valid.
• 17:16
  SPEAKER_01: Um, I don't think everybody is always a comfortable storyteller.
• 17:21
  SPEAKER_01: Um so that's quite interesting.
• 17:23
  SPEAKER_01: So that you obviously got some first-hand knowledge of advisors saying explicitly what could be helpful to them.
• 17:29
  SPEAKER_01: I think it sometimes it can be considered easier for the bigger outfits that maybe have the resource to really throw their marketing power content engines really behind these initiatives.
• 17:42
  SPEAKER_01: Um, I guess on the flip side, just to sort of play a contrarian view, if you're a boutique that doesn't necessarily have deep pockets or necessarily um large marketing teams, and you're not necessarily in the sort of big solutions space, um, but more um, I guess providing a specific product in a specific area where there's demand.
• 18:07
  SPEAKER_01: Um, how do you think that these companies can, the boutiques of live can really um penetrate better into the advisory market, or do you think they just shouldn't try?
• 18:21
  SPEAKER_00: Yeah, and I think I think it's um this is something that Heather and I were talking about just very recently, which was you know, how do you, depending on your product set, how do you gear up your sales and marketing um uh setup effectively?
• 18:33
  SPEAKER_00: So if you've got something like that, which might be the provise of a, if it's a single sort of strategy, whether it be equity, fixed income, something like infrastructure, perhaps, um if it's something like that, then it probably sits in terms of the um within those central influences, it's probably sitting as part of a portfolio.
• 18:50
  SPEAKER_00: And I think within that, what you can then do, I think, irrespective of the size of the marketing team, perhaps, is actually you can deliver some of that content, which is actually content around, that brings to life, tells the story of what it is you've got.
• 19:01
  SPEAKER_00: I think you're absolutely right, Twink.
• 19:03
  SPEAKER_00: You have to then say, you know, who is my who is my target market for this product?
• 19:07
  SPEAKER_00: And if my target market isn't 24 of the 26,000 advisors, then actually I can say, Do you know what?
• 19:12
  SPEAKER_00: You know, it's okay, I don't need to worry about it.
• 19:14
  SPEAKER_00: And I'll just focus on the 2,000 that I know this is going to be relevant for.
• 19:18
  SPEAKER_00: Um, and that is as much a sort of the key decision I think in making in terms of actually if you're in that smaller boutique space, is actually again, you know, really understanding the target market and actually who I'm selling this to.
• 19:28
  SPEAKER_00: And in understanding that, you can then really start to think about what is my marketing proposition to go alongside my sales effort effectively.
• 19:35
  SPEAKER_02: Yeah, I mean there's huge advantages that can be had from being a small player because you can be really nimble, right?
• 19:40
  SPEAKER_02: Um and so you can probably do things that are a bit more, you can take a bit more risk than than than others might with their messages.
• 19:48
  SPEAKER_02: Um, but yeah, you absolutely have to define that target market and not go after everyone and then ask them.
• 19:53
  SPEAKER_02: And and that's I mean, I run a boutique market research firm.
• 19:57
  SPEAKER_02: And so the approach has to be going to my customers and asking them what they want.
• 20:01
  SPEAKER_02: And um, and that that should be true with any business, but it's almost easier to do with a boutique because you've got a smaller number of people to please.
• 20:10
  SPEAKER_00: Yeah, and I think that that that that's the point again.
• 20:12
  SPEAKER_00: I think we've you know we we need to do a lot more of as an industry is listen to our clients, and that's across the board in terms of actually just us as us as firms is actually listen to what our clients want.
• 20:21
  SPEAKER_00: Um and thinking about, you know, I think we we're all very good at sitting around and thinking about what we our clients need and actually, well, let's put it on the other foot and actually listen to what our clients are telling us they want.
• 20:30
  SPEAKER_00: And I think that's true both in terms of actually whether it's just product related or actually, you know, I've seen some recent surveys where um you know marketing teams have gone into the market and actually done a conducted surveys with advisors to ask them, what is it that we provide that would help you?
• 20:45
  SPEAKER_00: Um, and again, I think it's just bringing that voice of the client back into the business.
• 20:48
  SPEAKER_00: And however you can do that, now, whether that's through having a presence in social media or whether it's through sort of research or surveys, whatever it might be, bringing that voice of the client back into your business is really, really important because, and I think it's it's both the job of sales and marketing working together to bring that voice back into the business to then you know work out actually what is it our clients want and let's deliver what they want.
• 21:10
  SPEAKER_01: And I guess it can be quite easy, can't it, to sort of think of the market just as sort of one big whole.
• 21:15
  SPEAKER_01: And maybe we could get into the sort of nuances actually of the advisory market because to your point around really listening to what they need, they can be very different to your smaller, sort of one two-man bands to the sort of bigger, bigger outfits.
• 21:28
  SPEAKER_01: Um, and and specifically for marketers, thinking about how do we target, how do we segment, how do we think about the personas of the advisors that sit in these different um businesses.
• 21:39
  SPEAKER_01: So it'd be great actually, maybe Heather, you could give a sense as to the profiles of the different advisory markets out there.
• 21:47
  SPEAKER_02: Yeah, advisory and type businesses.
• 21:49
  SPEAKER_02: So um so sole traders um I would split into those that are directly authorized and appointed reps, because that's going to influence the way that they run their business.
• 22:00
  SPEAKER_02: Business and their investment choice for the next bucket for sort of two to five or two to ten advisor firms.
• 22:09
  SPEAKER_02: Again, looking at where they get their regulatory permissions from, whether they're using any outsourced service providers, because that can have an influence on how they structure and run their business.
• 22:22
  SPEAKER_02: Other things to look at are whether they're focused on clients who are retired or in the accumulation phase.
• 22:29
  SPEAKER_02: For bigger firms, they're going to be across the piece, but smaller firms tend to focus on a entrepreneurs or there was a firm I was talking to a few weeks ago that focused on doctors.
• 22:43
  SPEAKER_02: So understanding where they're focusing and that will influence the way that they're running their business.
• 22:47
  SPEAKER_02: But I would look both by size of firm, not assets, but the number of advisors, nerve employees, and then where they're getting permissions, where they're outsourcing.
• 22:57
  SPEAKER_02: And that's not investment outsourcing, but compliance, service and support, power planning, the whole piece.
• 23:06
  SPEAKER_00: Yeah, and I think that's it's quite typical.
• 23:08
  SPEAKER_00: I think that we, again, we think of an industry and we think about assets.
• 23:10
  SPEAKER_00: It's always about what's the one where who's got the biggest assets?
• 23:13
  SPEAKER_00: And we think in terms of asset sizes, toather's point, we should be thinking about actually the firm compositions and what they do.
• 23:19
  SPEAKER_00: And so, you know, I think within that, thinking about the various different propositions that you might have.
• 23:24
  SPEAKER_00: And I think in some respects, you know, we we talk we talked about prod, you know, so which is the regulation that's just come up, which is actually asking advisors to segment their client base.
• 23:33
  SPEAKER_00: And it's really interesting when you talk to them about you know how they're segmenting their client base.
• 23:37
  SPEAKER_00: And there are there are some that'll tell you that they so they segment on assets themselves in terms of clients, because I guess it's it's kind of where we've come from, it's kind of where we've grown up.
• 23:44
  SPEAKER_00: Um, but actually that there are equally there are firms saying, well, actually, no, I should be segmenting based on need, which is actually, do I have clients in decumulation that have a different need to a client in accumulation?
• 23:53
  SPEAKER_00: In theory, you should do.
• 23:55
  SPEAKER_00: Um, I think that yeah, the key thing for us is if in terms of accumulating wealth, that's a fairly straightforward investment journey to a degree.
• 24:02
  SPEAKER_00: Um, when you get to the decumulation phase, and I think this is this is probably the biggest opportunity, you know, as an industry, I think a complete industry that we have in the next kind of five, 10, 15 years, is we're gonna have a lot of people retiring who for the first time will need to take financial advice on their retirement needs.
• 24:17
  SPEAKER_00: And actually looking at sort of, you know, as we we move from the sort of the DB to DC sort of phase, and we have more people coming out with a DC plan rather than a DB plan, is really thinking for the first time, you know, what needs do these people have?
• 24:30
  SPEAKER_00: Because these people don't just have one need, they might have three or four needs.
• 24:34
  SPEAKER_00: So actually, as an advisor firm, how do you deal with a client who needs a salary replacement, might need a discretionary pot of money for their holidays, might be wanting to help their children on the housing ladder, and indeed pay for their parents in long-term care and leave some money behind for their own children.
• 24:50
  SPEAKER_00: So I think what you're gonna get into is a much more sort of um not complexity, but breadth of solutions that advisors are gonna talk to their clients about, which is what is it you need?
• 24:59
  SPEAKER_00: And actually, within that, I think what we then need to do as a sales and marketing um teams is actually think about okay, well, actually, how do we help them with you know those various different sort of individual journeys in terms of thinking about it's not just one journey in retirement, it's multitude of journeys.
• 25:12
  SPEAKER_00: So, you know, clearly we talk the regulator is talking about pathways now that they talk about.
• 25:16
  SPEAKER_00: And I think it's it's really sort of thinking about, you know, going back to Heather's point, you know, how are these firms segmented their own client base and what is it they do?
• 25:23
  SPEAKER_00: And absolutely right, if you've got a firm that's an appointed representative, you know, does your marketing actually just come through at that central influence point and then come down into the um down into those advisors?
• 25:33
  SPEAKER_00: Or actually are you able to you know serve to those appointed representatives directly?
• 25:38
  SPEAKER_00: Um and that you know allows you to you can control the message in that regard.
• 25:40
  SPEAKER_00: So it's really thinking about you know, how do I sort of work with the central influencer to get down to those people making that local choice?
• 25:48
  SPEAKER_01: I think it's really interesting thinking about solutions, um, just in and just outcome-oriented focus really.
• 25:57
  SPEAKER_01: That's the sort of language that's really emerged, obviously, through the products we offer, but but thinking about 10 years ago, you know it just wasn't really sort of in the repertoire when you're talking about product.
• 26:08
  SPEAKER_01: Um and you think this, do you think that's sort of as a direct result to sort of the RDR and implementation of that?
• 26:16
  SPEAKER_01: And and maybe there is more of this customer focus that people are thinking about in terms of how we're going to deliver to the expectations of our investors so that we can have a better conversation.
• 26:28
  SPEAKER_01: And so I wonder whether just playing devil's advocate, there is a little bit more understanding as to the language we have to use, and that we're on a journey to have the investor right at the heart of our thinking and our product development and our and our marketing and communications.
• 26:44
  SPEAKER_01: Would you say that you're seeing more of that?
• 26:46
  SPEAKER_02: Or I'm a bit of a solution skeptic, I guess, because um so the the way that advisors, so the the if you look at platform assets, about three-quarters of platform assets are on advisor platforms and they continue to grow more rapidly than D2C assets.
• 27:03
  SPEAKER_02: And so thinking about what the end customer needs is important, but it has to fit into the financial advisor's business model as well.
• 27:13
  SPEAKER_02: And um and advisors are sometimes looking for solutions for their customers, but often that's their job.
• 27:20
  SPEAKER_02: The financial plan is their job, and and so a single solution doesn't always work for them in minimizing tax liabilities for the customer.
• 27:27
  SPEAKER_02: So it's not just about the ability to earn a fee, which people often go back to well, how are they going to charge their ongoing fee if they've put them into a single solution?
• 27:35
  SPEAKER_02: But there's there's other things that come into that.
• 27:37
  SPEAKER_02: And um, and you know, if they're taking a bucket approach, looking at the long-term bucket, if they're looking at um gifting money to their children, there's all sorts of challenges that a solution, single solution doesn't always work.
• 27:48
  SPEAKER_02: And so um so I think it's really important to think about what the how the advisor is running their business and why they're making the decisions they're making to make sure that the products fit into that framework.
• 28:03
  SPEAKER_02: And in some cases, solutions fit well.
• 28:06
  SPEAKER_02: I think that the focus on the language of the end customer is really good.
• 28:09
  SPEAKER_02: Um, and it is about the outcome for the customer, but it's not necessarily the asset manager's job to deliver the full outcome.
• 28:17
  SPEAKER_02: It's the outcome that they're meant to do on that product that's part of a wider portfolio.
• 28:22
  SPEAKER_00: Yeah, I would dunno, I would absolutely agree.
• 28:24
  SPEAKER_00: And it's as a as an industry, I think we've, you know, clearly we've we've we've thought in the past about you know, the outcome that we only had to think about was return.
• 28:33
  SPEAKER_00: And so the outcome was just the best return you could get, possibly, with what you had available.
• 28:37
  SPEAKER_00: And, you know, if I even go back sort of you know 10 years ago, 15, 20 years ago, there was our only real goal was to grow clients' wealth.
• 28:44
  SPEAKER_00: And you know, clearly just thinking about nothing more simplistically than you know, that was the outcome.
• 28:49
  SPEAKER_00: We just had to grow clients' wealth.
• 28:51
  SPEAKER_00: And I think to Heather's point, though, what what we really should be thinking about is actually, well, well, what is the outcome that client is trying to achieve?
• 28:56
  SPEAKER_00: Now, because it could be that actually that client has different needs.
• 29:00
  SPEAKER_00: That client might be trying to grow their wealth, but actually they might want a less volatile journey than somebody else.
• 29:05
  SPEAKER_00: And again, I think that comes back to if you if you tandem that with the risk profiling that came in post the regal distribution review, if you tandem that in with thinking more holistically about the journey the clients want to go on, and the outcome absolutely, I think, is about as much about that journey as it's the destination, as much as the you know, the end point where you get to the journey and the destination together.
• 29:25
  SPEAKER_00: Um, but really thinking now about you know, there there isn't a yeah, I don't believe there's a silver bullet to Heather's point that just allows you to deliver everything the client wants.
• 29:32
  SPEAKER_00: And actually, the outcome for the client could be nothing more simplistically than I just need a salary replacement if I'm retired.
• 29:38
  SPEAKER_00: Um, or it could be actually I just want to, you know, I'm I'm 45, I'm 50, and I just need my money to work really hard for the next 10 years to get me the biggest pop possible.
• 29:46
  SPEAKER_00: And I think it's thinking about those outcomes as an industry and as thinking about sort of that, again, back to that point.
• 29:52
  SPEAKER_00: If we think about those outcomes in the client language, what can we then do as sales and marketing teams to think about how we tell stories into that uh environment where we're thinking about those client outcomes rather than the outcome to Heather's point that we achieve with our investment products that might be just part of the solution.
• 30:08
  SPEAKER_01: So I guess thinking and kind of looking further ahead as we're starting to, and for marketers, looking at the 2020 content plan, storytelling, um, wondering how they can demonstrate better understanding and uh empathy with the sort of target market, whichever, whether it's the whole of the UK visor market or sort of a specific part of it.
• 30:32
  SPEAKER_01: What would be your tips, I guess, for what to be thinking about within their content or or for kind of how they might be disseminating it into the market for best effect?
• 30:44
  SPEAKER_02: So I'd recommend taking a targeted approach, which we talked about a lot.
• 30:48
  SPEAKER_02: Um, and I would think about content that would help the advisor in their business.
• 30:53
  SPEAKER_02: And so I think I think there's you know there's a lot of things around compliance and regulation that's quite tricky for asset managers to really support advisors on.
• 31:00
  SPEAKER_02: Um but there's also challenges around political uncertainty, economic uncertainty, um, giving advisors messages that they can use in conversations with customers to um to show a depth of understanding, but also to um to ease concerns that their customers are feeling.
• 31:17
  SPEAKER_02: Um and then client acquisition is another challenge.
• 31:20
  SPEAKER_02: So we often hear about the advice gap and how advisors have too many customers.
• 31:25
  SPEAKER_02: They don't have too many of the right customers.
• 31:27
  SPEAKER_02: Um, and so uh so helping advisors to find those right customers and helping them with customer acquisition, I think, would be something that would be very much valued by financial advisors.
• 31:38
  SPEAKER_00: Yeah, and I think I would I would encourage anybody, anybody, sort of any marketing team to actually get out there and actually meet with these advisors and actually sort of, you know, whether that's um, you know, go out and do a series of meetings with the sales team and just go and sit in the offices and listen to them.
• 31:54
  SPEAKER_00: Um and what you'll find um, I think is that the the the varying different degrees and size of these advisor firms will dictate to Heather's point what it is that they want in terms of the content.
• 32:03
  SPEAKER_00: And a lot of that could be around client acquisition, acquisition of the right type of clients.
• 32:07
  SPEAKER_00: And it could be about, you know, something as simple as, well, can you help us with our marketing?
• 32:12
  SPEAKER_00: Because again, I think you know, these advisor firms historically, if you look at the background, came out of um, you know, business owners who were historically sort of tied salespeople, back in working for an Allied Dunbar or a Midland Bank or you know, the prudential, even.
• 32:26
  SPEAKER_00: Um, and so they've really only ever done advice.
• 32:29
  SPEAKER_00: And actually, it to some of them running a business is different, but actually to run a business and then think about the marketing mix within that business is almost alien to most of them, I would suggest.
• 32:37
  SPEAKER_00: And actually, so I think it's for the marketeers thinking about how we could help them think about how they could market and the marketing mix and the medium they could use, and actually how could they better utilize social media?
• 32:48
  SPEAKER_00: And is it Facebook, is it Twitter, is it LinkedIn, you know, any one of those things.
• 32:51
  SPEAKER_00: I think that's the value add.
• 32:53
  SPEAKER_00: And I think this is the really key thing that sales and marketing is that we need to think about with our clients is what is our value add?
• 32:58
  SPEAKER_00: Because if it's just if the conversation is only about price, it's only ever going to be about price.
• 33:02
  SPEAKER_00: But actually, if we had to think about the outcome, the price, but also the value add that we bring as a organization, get in there and speak to advisor firms, ask them what they want, they'll tell you.
• 33:12
  SPEAKER_00: I mean, that's my experience there.
• 33:13
  SPEAKER_00: But they don't hold back either, they'll tell you what is it you can help them with and um or areas they're concerned about and how you can help.
• 33:19
  SPEAKER_00: And I think, and then within that, it's then back to that the point we made, which was just thinking about how you know what we can help deliver to them, which helps them sit in front of their clients and actually um you know help their clients in terms of that investment journey and actually whether it's uncertainty about the political landscape or uncertainty about you know their retirement journey or that they're not gonna have enough money.
• 33:38
  SPEAKER_00: Um, you know, anything like that, I think, is stuff that you know marketers and and you know can help um clients with.
• 33:43
  SPEAKER_01: Brilliant.
• 33:44
  SPEAKER_01: Well, I think that's the perfect point to sort of maybe draw up stumps.
• 33:47
  SPEAKER_01: Um, thank you both so much, Fergus Heather, for your time today.
• 33:51
  SPEAKER_01: I think uh a great discussion with loads of useful tips and practical notes for for marketers in the industry.
• 33:57
  SPEAKER_01: So thank you again for your time.
• 33:58
  SPEAKER_00: So thanks to the