Hunter becomes the hunted

I had my financial advisor round this week. Trying to make the most of the Sweetlove pension millions (I wish) with a base rate of 0.5% is not easy. But we got talking about our respective industries, as you do, and it occurs to me that there are quite a few parallels that we could look to.

The Financial Services industry has had its fair share of mis-selling and customer complaints in the past and the dodgy Independent Financial Advisors (IFAs) who used to move from punter to punter selling what made them the most money with scant regard to what was actually right for the customer have largely been eliminated. All IFAs now need to pass about three certificates and go through a very thorough and open sales process with every customer. The customer knows exactly how much of their cash actually gets invested and how much the IFA keeps as margin etc. Everything is weighted in the customers favour. Sound familiar? There are some definite echoes of the mobile cash-back redemption schemes that never paid out and then Ofcom’s reaction introducing the voluntary code and then GC23 regulation. Dealer culls and all that painful stuff.

The similarities continue. Whereas the FS industry was almost 100% commission based in the past with some claw-back terms by 2012 it will be 100% revenue share. So my advisor has had to turn his business upside down. He now spends his time building up and managing a ‘pot’ of customer money that he moves around in lumps of cash, bonds, property and shares dependant on market conditions and customer risk profile. I will now get an email every 90 days telling me what the value of my investment is and asked whether I accept their proposals for where it will be for the next three months. How good a service is that? I’m in control but they are the specialists working the market and advising me. Three years ago he employed 14 self-employed ‘hunters’ who signed up new business and took a cut of the commission and then on to the next kill. They are all gone. Now he has two investment managers (or ‘farmers’) who manage the pot. He slowly adds new investors money to the pot while the pot grows for all and his business survives on the small percentage (of a big lump) that we all agree is his for managing it. His business has real demonstrable value.

A mobile dealership has a similar shift to make as the networks are now rewarding you in line with how much your customers spend and how long they stay connected. How well are you adjusting your business accordingly?