Disruption: developing a growth plan that embraces change

As advisers seek to explore how to thrive amid changing industry and market conditions, Russell Investments’ ongoing theme for 2018 is ‘Simple Actions’. Last week was our annual Adviser Forum with PwC’s Robert Mellor – Partner, Asset and Wealth Management Tax, and Tim Noonan – Managing Director, Russell Investments Strategic Business Initiatives. We asked: What simple actions can help advisers to reduce risk and cost, increase returns and grow business? The topic of the day was disruption.

Don't get left behind

Disruption is the buzzword for 2018. Whether its regulation, technology or politics - disruptors are changing the investment landscape of today. The only way to avoid getting left behind is to embrace the changes, act accordingly and prepare your practice. Having a growth model that digs down into the what, the how, the who of disruption is a great way to get ahead.

Regulation, information and fees

FCA, MiFID II, RDR, the DOL –  regulators and regulation around the world have recognised the need for change following the 2008/09 Global Financial Crisis. As such, we’ve seen a demand for clarity around how the industry works, information about fees and products, and more transparent reporting. According to PwC’s Robert Mellor, this has seen the creation of ‘a buyer’s market’ as regulation pressure pushes fees down and investors demand more for their money. Furthermore, it is seeing investors become better equipped, understanding the nuances between alpha and beta, for example.

Russell Investments’ Tim Noonan believes that the only way forward is to get behind the regulator, rather than resent them. A successful business, he says, will be the first to understand the impact of changing regulation; and thus, will be the first to grow. To succeed, advisers need to get to grips with how fees translate to clients and understand the impact of the changing regulatory landscape. Keep the regulator on side by having the knowledge and confidence that you are recommending the right product, at the right time.

Technology, automation and the human touch 

How well firms embrace technology will help to determine which will prosper in the years ahead. It isn’t just the threat of sophisticated technologies such as of Robo-advice or Fintech that advisers should be worried about. It’s simpler than that. Digitalising back- and middle- office functions is a great way to improve efficiency and keep your business moving forward. Practices should consider automating repetitive tasks, or outsourcing them, where possible. Reorganise your business structure so that you can put manpower to work where they can add most value – such as excellent service and personalised advice, suggests Robert.

Gone are the days of product-pushing, say both Robert and Tim. Multi-asset and outcome-driven solutions are soaring in popularity (and increasingly, this will include environmental, social and governance outcomes, too). Remember: There is a direct relationship between personalisation and fee pressure. In order to grow with this shift in client appetite, look to tailor your advice model to what the client needs and what their circumstances are. Tim suggests that practices should start by grouping client banks into phases i.e. where they are in their journey, not just simply by their age. Clients are less likely to request discounts if they believe that you are tailoring your service to them.

The finish line 

For any practice in today’s environment, the key to growth is ensuring that your clients make it to their finish line, well-funded and happy. Disruption is going to continue – whether that’s from Brexit, markets or lifestyles – and that means more volatility. But with change comes opportunity. Savvy advisers need to take another look at their growth plans and delve deeper. Embrace regulation, utilise technology and focus on quality by considering ways to improve and expand upon client service.


Read the full PwC report 'Asset and Wealth Management Revolution: Embracing exponential change'.