So this is the second in our series of RDR blogs. The idea is that we’ll apply project methodology to RDR as a whole. We’re aiming to show that even the very biggest change programmes needn’t be that scary if you a) have the right team in place and b) take a structured approach.
We’ve been part of large organisations and we know that mandatory change programmes are treated quite differently to proposition developments. The former is treated a bit like writing thank-you cards after Christmas when you’re a kid. It’s a bit of a bore, and tends to get solid, dependable people put on it. Propositional development is more fun, sparky, catches the attention of the front of house guys and gets the thinkers put on it.
But here’s a thought. What if you didn’t treat RDR as a mandatory change programme, but instead treated it as an amazing omnibus programme for proposition development? A chance to restructure your product set for a new world, with the ability to tinker with almost every part of everything in your control. Would that make you think of it differently? Put different people on it?
For us, RDR is full of opportunity for providers to make a tangible difference to their propositions. One key way to train our minds to think more positively about it is to take a bit of basic project methodology for proposition development – the ‘opportunity statement’, often referred to as ‘the size of the prize’. This is the part in Dragons’ Den where entrepreneurs tell the Dragons that £4.3bn is spent on xyz products annually, and if we get just 1.5% of that market we’ll all be able to move to a non-extradition country and spend the rest of our natural lives engaged in morally flexible activities.
That isn’t the right way to do it, but there is virtue in looking at your key competitors, thinking of where they have an edge over you, identifying their inflows and AUA and working out what you could do if you were able to address some of those issues. Here are a couple of ideas:
- Wraps – fund supermarkets pick up high inflows because they are simple to use and make it simple for investors to understand. What % of existing supermarket flows might you be able to hijack if you took the chance to simplify your disclosure and marketing material as part of your RDR programme? The supermarkets have a lot to do anyway – maybe you can steal a march on them.
- Fund supermarkets – the wraps tend to gain high market share with advisers who have embraced RDR (or its principles) early. The best of them operate with absolute clarity and spend considerable effort implementing and onboarding adviser firms; even coaching them sometimes how to present an unbundled proposition. Could you do the same? Up to 25% of advisers are planning to review their platform choices this year – could you attract some existing AUA away from the wraps and develop a deeper relationship with some advisers as a result of moving to transparency? What would it take in the way you’re refreshing your systems to provide the building blocks for that?
To that we’d add the fact that RDR will likely shake out some under-par competitors, so there may be a rising tide that will lift your boat – as long as you do a good job.
So a formula might look like this:
Existing AUA / inflows
minus
market exits from advisers quitting the industry
plus
additional inflows/AUA from failing providers
plus
new flow from untapped advisers
plus
new flow from improved competitive position
equals
opportunity
Would that be enough to get your organisation more excited about the RDR opportunity? We think it should.
Next time, we’ll build on this and look at making the case for investment in the RDR opportunity. In the meantime, try not to get too excited…
