Without data and evidence, it can be hard to justify certain claims, or prove that you’ve delivered a particular outcome. 

    Take the mystery of whether two British climbers, George Mallory and Andrew “Sandy” Irvine, conquered Everest in 1924, almost 30 years before the feat became official. They died in the attempt, but there is significant evidence to justify the claim.

    The pair are believed to have carried a camera, though this has never been recovered. Were it to be found, the hope is that a photograph of Mallory and Irvine at the summit would resolve the mystery once and for all. 

    So what does this have to do with our world of advice and financial services?

    I am fascinated by the ever-evolving world of personal finance. From my career in the early 1990s as little more than a product salesman to my recent past as managing director of The Fry Group, I have designed and built a variety of investment offerings. At the time, each of these promised much and were carefully considered to be a solution to client needs. 

    In today’s market, we can sub-divide the investment solution into three distinct but potentially overlapping disciplines: appropriate advice, safe custody of assets via platforms and management of those assets either in-house or through an external discretionary fund manager (DFM). 

    Any one firm could potentially deliver all three services provided they have the necessary resources of knowledge and finance. The FCA probably takes the same view, provided good client outcomes are reasonably achieved.

    Yet few advice firms will have the scale, or the inclination, to be able to build and maintain their own platform.

    In time, this functionality will boil down simply to service and price, likely with a reduced number of large scale providers meeting those needs. This might be white-labelled or delivered under the platform’s brand – either way, this should have little impact on the service clients receive.

    Asset management is altogether different. Advisers can buy in investment research, take on dedicated staff and effectively market their own investment proposition, with some notable commercial success achieved by some firms in this regard.

    All advice firms will make a decision on whether to advise clients on the selection of assets directly, build their own investment capability under an in-house discretionary model, enter a form of joint venture with a DFM, or outsource investment management completely. 

    Assuming all four solutions offer suitable client outcomes, the drivers behind the chosen investment approach might be the commercial benefit in owning the investment management process versus the reputational risk if things don’t work out.

    There will also be non-financial costs to consider, such as the level of time commitment and resource involved in a more hands-on approach. 

    Over time, the strength of the proposition will be judged on the basis of actual client outcomes.

    As we know, flaws in the advice process as well as outright poor advice will ultimately be determined by the Financial Ombudsman Service, which will calculate the level of redress it deems appropriate. Any marked deviation from a market neutral return could see a firm at risk of having to pay redress.

    Derisking a business and maintaining a reputation as the go-to source for advice is critical to how sustainable an advice firm is. These decisions around investment management are therefore big decisions to make. 

    From my perspective, I like to base my decisions on clear data. Given time, I wonder if the best source for that data will be platforms.

    If you think about it, platforms already know what clients are paying for advice, asset management and custody. Platform reporting on performance against an index or other benchmark is also widely available. 

    In future, platforms may start to report on comparative outcomes from different advisers. To take this idea further, platforms would be well-placed to analyse the risk and return characteristics of different propositions, or indeed different clients from one advice firm.

    The data is there – it just needs to be mined. Platforms have the data to prove the prospective outcomes and measure them over time. 

    In the meantime, I look forward to hearing one day that the camera carried by Mallory and Irvine has been found on the high reaches of Everest. Then at last we will have the final proof we have been waiting for.

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