Consolidators fail due to poor processes
By Jason Spits
Aggregation and consolidator groups have failed because they have not adopted group wide systems and processes that would drive their planning models and attract clients, according to Customer Acquisition and Retention Management (CARM) managing director Matthew Lock.
These groups should have been prepared to adopt a unified approach and the failure to do so has resulted in replicating the corner-store model on a massive scale, Lock says.
Speaking at last week’s Resnik Conference on planning in 2006, Lock says the industry has been through two stages of industrialisation, the mutualisation of product and the advent of consolidated reporting.
The next step, which he refers to as the holy grail for retail financial services, is the creation of processes that are applied in the same way for every client thus reducing the contact with the principal planner but boosting it with the planner’s business.
“This is achieved through the collection of models and processes, which result in a positive and scalable relationship between revenue and costs,” Lock says.
“This is being driven by planners beginning to understand that delivering advice can only exist in two areas in the long term.”
These two areas are large-scale business that can be branded and thus attract clients or smaller niche players, but such business are hard to brand for future growth.
Another major driver behind the shift to an industrialised business model is that it increases the take out value for planners looking to sell their businesses.
“Planners need to understand that the business must be made to run without them and so provide value and while this takes minutes to see and understand it takes years to reach the stage where it occurs,” Lock says.
The leap in thinking needed to drive toward industrialisation is that the front end drives the back end,” Lock says.
“If advisers sell handmade services it has to be delivered by hand. If they sell a process or framework, systems can be used to deliver the service.”
AUTHOR
Jason Spits
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