5th May 2009

Life on Mars

Even now, a very large number of major and an even larger number of minor "manufacturers" of financial services products who rely on the IFA sector for their product distribution, the world of the small, directly regulated IFA is akin to Mars. They know it exists, they can see it, they have read about it but they have not visited it.

Why is this?

Well, since the late nineties, providers have concentrated on reducing overheads. With ever tighter margins and the need to cut cost, most, if not all major firms have got rid of field representation for the small directly regulated IFA and with it went the relationship and intelligence gathering point.

Today those firms have heard of the existence of small directly regulated IFA firms, passed on by their tribal “elders” by way of “storytelling”- but, these “elders” have now all passed on to another world ( redundancy or retirement) and could no longer be communicated with to enable their successors to benefit from their wisdom.

Instead, all efforts are focussed on supporting the volume business producers- networks and national IFA models, where for most providers roughly 70% of their business comes from 30% of the market. This support is at the expense of the small directly regulated IFA firms and it is a huge expense. Networks and national IFAs have the benefit of easy access to training, education, tools, resources, business support and promotion. This is often at a considerable financial cost of course- and in terms of the loss of a big amount of corporate identity and controls of a financial, regulatory, promotional nature. And it is this set of constraints that mostly deters the small directly regulated IFA firms from joining them.

So, we have a world where a level playing field is no longer level. Providers are now frightened of being held to ransom by the “bigger boys” of IFA distribution who have got fat on the diet of financial support over the years and continue to pay those networks very substantial six figure sums to still be part of their “gang”. In fact the network model as it is today could not exist without this “protection” money being paid. Providers are now realising more and more that if they can find a low cost way to get the 70% of the IFA market that only produces 30% of their business to be more productive, the world would be a better place for all and the “protection money” could be better utilised elsewhere.

So how do they do this?

Well, first they need to get a mission to Mars underway and gain intelligence. What is a small directly regulated IFA, what problems do they face, how are they rewarded, what are their clients like, how do they get and retain their clients, how to grow their business, what support is needed to work smarter and how can that support be quickly and effectively delivered at low cost?

Their needs are mostly very clear and strangely simple. They need:

1. Easy, free access in one place to education, training, tools, resources business marketing ideas- bring the mountain to Mohammed.
2. Support in the daily struggle with poorly thought out unstructured, uncontrolled regulation and the effects it has on their business past and present.
3. Get a better understanding the impact of RDR upon their future and how to best get the accreditations required in a timely and economic way.
4. A move away from carrying the can if the product fails due to “design faults” not seen at the time of the advice and sale process.
5. An environment where like minded people can exchange and share ideas and intelligence by way of peer support.
6. To see that the firms whose products they distribute, care and appreciate their role, how they go about it and will help support when and where they can

History as always can be relied upon to assist with developing plans for supporting, nurturing and developing the small directly regulated IFA distribution sector. To see this future, we should look back at the history of Lloyds of London to give us a good “steer”.

• In the absence of mass media, the coffee houses emerged as the primary source of news and rumour in the late 17th century.
• The coffee house that Edward Lloyd opened, in 1687 near the Thames on Tower Street grew so popular that in 1691 Lloyd moved it to much larger and more luxurious quarters on Lombard Street, very near to it’s high rise, high profile position today.
• A corner of his coffee shop was reserved for ships' captains whose vessels were anchored in the Pool of London nearby. They could compare notes on the hazards of all the new routes that were opening up.
• Lloyd, responding to the insistent demand for more information launched "Lloyd's List" in 1696 and filled it with information on shipping movements and intelligence on conditions abroad and at sea, provided by a network of correspondents.
• Then this coffee shop saw those seeking and offering support for investment in risky ventures or voyages coming in “for coffee”. This support- a share of the risk- was taken with the individual risk-takers who gathered in the coffee house or in the precincts of the Royal Exchange.
• When a deal was closed, the risk-taker would confirm his agreement to cover the loss in return for a specified premium payment by writing his name under the terms of a contract; soon these one-man risk takers came to be known as "underwriters", Today they are in the most large insurance companies.
• Lloyd's List" was eventually enlarged to provide daily news on stock prices, foreign markets, and high-water times at London Bridge, along with the usual notices of ship arrivals and departures and reports of accidents and sinking's.
• This publication was so well known that its correspondents sent their messages to the post office addressed simply "Lloyd's." The government even used "Lloyd's List" to publish the latest news of battles at sea.

Well look out, here comes history repeating itself with the benefit of the internet. Panacea has reinvented the wheel and created a cyber coffee shop, an IFA portal and community of associated trades where you can “meet”, discuss matters of concern or mutual interest, exchange ideas, intelligence, access the very latest provider and support firms training, research, education materials, tools, news feeds and other valuable resources for mutual benefit and gain and importantly in one “cyber coffee shop space”.

According to the CEO and founder of Panacea, Derek Bradley, the time has come to “smell the coffee” and join the Panacea mission- community of major product providers and small directly regulated IFAs. With a growing membership of over 1400 community members and the support of some 16 visionary, major product providers, Mars can now be visited, the outpost in space has been created and there is room for all. And best of all it is free for IFAs.

www.panaceaadviser.com

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