What do the next ten years hold in store for us?

The only certainty is change.
The industry has seen a lot of consolidation over the past few years and clearly the world banking crisis and following recession led several financial institutions to regret their expansion plans with one of the biggest proponents, the Hartford, choosing to exit the UK, but there are opportunities for those that have weathered the storm.
A landscape once dominated by Life Assurance Companies is beginning to look very different as Asset Managers and Platform Providers start to fight for distribution space. With future emphasis being on funds under management producing recurring income, everyone is seeking profitability without draining capital through the introduction of so called low capital or “capital light” products.
 RDR also looks to change the landscape further as advisors will effectively be segmented and the cost of distribution will be more transparent and borne by the client rather than the provider. In future investment products will be broken into bite sized chunks.
It is likely that a wealthy client will be advised by an adviser in a different way.
They may receive advice to invest their money through a product wrapper such as a SIPP, which may be managed by a SIPP provider on an investment platform run by a fund supermarket. The investment advice may be provided by a Discretionary Fund Manager and funds invested in may be provided by both Asset Managers and Life Offices. There may also be a Tax Adviser involved. The Advisers & Discretionary Fund Manager will take a fee and the Fund Managers will take annual management charges.
All charges will be explicit, but ultimately several parties will benefit from the client’s investment. Major Life Offices may be seeking to provide several parts of this service. They will also continue to provide risk products such as Life Assurance & Health Insurance.
Not only will more parties be involved in each transaction, they will also all need to have an Intermediary sales force. As a result, consolidation of major Life Offices has been countered by fragmentation of the market.
A few years ago, one of the largest Life Offices grew its broker sales force to 350, whereas today most would consider 100 to be too many. There is no doubt that some of the big companies of today are benefiting from the reduced number of Life Offices, but they are also being threatened by new entrants.
However, while the IFA industry was dominated by approximately 20 Life Offices, we now see many more players with
Intermediary sales staff fighting for their market share.
The term “Product Provider” is much less clearly defined. Whereas the dominant players in the Intermediary space were Life & Pensions Offices, this is changing.
We have seen a big rise in the number of small players entering the market. There are now Platforms, Fund Supermarkets, SIPP players, Asset Managers and some Discretionary Fund Managers.  All are now trying to market their wares via intermediaries while others are trying to sell directly to the consumer. All need representatives. Many of these companies are smaller and with less knowledge of the market than their Life Office competitors, so they are more dependent on our expertise than their larger competitors.  
Ten years ago most assumed the large companies would be the ones to survive. In fact, consolidation means many of the big names have vanished. However, RDR has also created opportunities for new entrants to establish themselves in market niches. 
This segmented market means a step change in the winners and losers as Asset Managers, Discretionary Fund Managers and Platform Providers all fight for their piece of the market.

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