It’s my attempt to answer the eternal question of the small business owner – “Why can’t everyone be as great as I am?”

I’ll be arguing that the received wisdom - people buy people, or proposition - is wrong, and most marketing spend is pointless. I want to show how you can use the same tools as global companies to grow your business for free.

First, I’ll attempt to explain how meaning is generated, taking a brief (honestly) tour through neuroscience, linguistics and structuralism, waving at psychoanalysis and semiotics on the way.

Then, we’ll look at this in practice, including:

• Decoding an advert
• How it impacts your decision making – using platform choice as an example
• Constructing a your own brand model

When we finish you should understand the basics on how meaning can be exchanged between staff and clients, and how this can be used to grow your business whilst saving money. I’ll leave the motor running though, just in case.

It’s at the Hilton Hotel, Manchester Airport, I’m on at 2pm, and you can sign up by emailing ifp@smartfinancialplanning.co.uk

If you purchase music through iTunes, or store existing music through iMatch, when you die the ownership of your account and the contents in it reverts back to Apple. It isn’t just an oversight, they’ve consciously drafted it that way. Arguably that means you are renting your music, films etc from Apple rather than buying them, for pretty much the same price as buying physical copies.

I know there’s ways round it, using someone’s account details, ripping the content to disc etc. but that’s not really what we want.

Fortunately, Bruce Willis is on the case. I assume he’s armed and occupying a ventilation shaft in Apple HQ right now.

Rant over, I then realised how absolutely necessary this must be for a business like Apple, or presumably Amazon (haven’t checked their terms and conditions yet) to survive.

Physical assets get broken, lost, left in an attic or at the very least become unplayable via modern equipment over time. However, if all books or music were passed on down generations, how long would it be before you inherited pretty much everything you could ever listen to or read. I’ve got over 100GB of music in my iTunes library. After a few generations, other than new releases, there would be pretty much no need for anyone to buy from a back catalogue ever again. It’s already almost impossible for even semi-successful modern artists to make any money from new music. If Cat Power is going bankrupt after a big selling album in the US, what hope for anyone? Allowing digital music files to be passed on easily might be enough to make Elton John cut back on tiaras.

Retail businesses of all types rely on an ongoing, insatiable need to buy product. It doesn’t really matter if it’s online or offline. In a world where everyone already has those products, pretty graphs of endless exponential growth are going to face a little more scrutiny. If digital products don’t break, telling consumers that they have to hand them back on death seems like an unlikely long term fix to the problem.

One for estate planners, lawyers and people with Apple stock to mull over perhaps. In the meantime, I’m off to buy an iWill.

Following the FSA’s letter to providers, on which I commented last week, there have been plenty of platforms and providers offering advice to advisers on what they need to do to cover off Adviser Charging post RDR.

Unfortunately most are answering the wrong question. The question advisers need to consider is “What do we need to do to meet Adviser Charging requirements?” not solely “What does my platform require from me?”

I’ll try to clear this up. Not every adviser will need to have a new Client Agreement, in fact Client Agreements isn’t the critical issue, disclosure is. If you’re going to receive an Adviser Charge income post RDR you need to agree in writing with your client what the ongoing service is you will provide. You’ll need to confirm if you are independent or restricted. You’ll need to confirm in pounds and pence terms, as soon as you know it, how much the advice costs not just the percentage. You’ll need to confirm which tax wrappers, if any, you will be taking your fee from and how often.

Much of this seems sensible for inclusion in some form of Client Agreement, although unless you charge a fixed price, you won’t always know in pounds and pence terms what the advice will cost until you make your recommendation. There isn’t a set format for this, but a quick check through your existing documentation is the minimum every adviser should undertake right now. We’ve assisted a lot of firms with this recently who have thanked us simply for prompting a few simple improvements, which they wouldn’t have addressed otherwise.

It’s practically impossible to cover every requirement within an application form, so recent statements from platforms that advisers using them have ‘nothing to do’ are a little misleading from an advisers point of view. Equally, there is no ‘Magic Client Agreement’ which will address every disclosure, and our own template changes on a frequent basis at the moment. It’s going through another revision as we speak. But it is a good starting point.

One unanswered question left from the FSA’s otherwise very clear letter, is what happens if the platform or provider does check the adviser’s disclosures and finds them inadequate? Presumably they have to stop facilitating the Adviser charge and turn the fee off? I wouldn’t want to take that chance.

RDR places advisers in the driving seat for fee charging. With this comes a responsibility for ensuring all the regulatory requirements are met. Checking with providers and platforms on their requirements is important operationally, but it won’t provide the complete picture to manage your risk. For that you’ll need to understand and apply the rules yourself. It’s worth the effort as you can be sure that regardless of what providers want from you, you’re doing the right thing for your own business.

As for the long term future of Adviser Charging, I refer you to Mr Polson’s blog again. Partly, because I get a mention. There is a tax advantage to using a pension wrapper for Adviser charging, but at the risk of re-stating the obvious it’s worth remembering that only the proportion of the advice relating to the pension can be charged via that wrapper. Putting all fees for a holistic plan (i.e. including non-pension advice) through a pension wrapper is in breach of HMRC rules. And there’s a few people forgetting this point at the moment…

1. See all the Adviser Charge agreements. Skandia adopted the most conservative approach by issuing their own paperwork to advisers for completion and signature by clients which have to be sent to them to trigger Adviser Charging. This is a belt and braces approach which Skandia launched earlier in the year, well ahead of others. Adopting this approach means there is little need for any additional work thereafter.

2. Random sampling. The FSA letter makes specific reference to this as an example. I expect most platforms and providers to leave themselves the option of doing this, even if they only wish to use it in certain circumstances. It would allow a platform to request evidence that disclosure was made either by asking the adviser for it or asking the client direct.

3. Notification to the client. I suspect this will prove to be the most popular option, probably combined with some random sampling. Where Adviser Charging is activated, a letter is issued to the client confirming what has (and should have) happened and allowing the client to contact the platform or provider if this was against their wishes or if they have any concerns. Negative consent should be enough, rather than requiring clients to respond. This is relatively non intrusive but some advisers may be concerned that clients who already understand they are paying a fee will think something more fundamental than the mechanics of that payment has changed, and be concerned. It will require some advance communication from advisers.

I expect a combination of 2 and 3 to prevail, but in whilst we wait for decisions to be made, advisers as a minimum need to ensure that the client agreements they have in place with clients are up to date. That means you disclose the fee, in pounds and pence terms where possible (it will eventually need to be disclosed in pounds and pence terms including which tax wrappers the charge comes out of once you know this), all terminology is correct, and you include a breakdown of what services you will offer for the ongoing charge if an ongoing fee is to be paid. We have issued guidance and template agreements, to threesixty clients, which include these points and others. As changes need to be agreed and signed by clients, prior to any move to adviser charging, this puts extra pressure on advisory businesses at an already difficult time. A simple rebalance could trigger this, as it will turn off fund based commission for unwrapped collectives.

Similarily, platforms and providers face a real battle making these operational changes so late in the year, alongside their existing RDR change programme. The pressure will be more on platforms than providers as switches within products are not likely to turn off trail and require a move to Adviser Charging. Of the platforms, Skandia would appear to have done everything required by adopting the approach outlined in my first point. Standard Life and possibly Axa (yet to be confirmed by them) have adopted a combination of 2 and 3. The rest will now have to make a decision as to how they will manage this issue.

Addressing this in October 2012 is concerning. My experience to date is that across the whole IFA market a significant percentage of advisers do not have appropriate agreements for Adviser Charging in place with their clients, and the FSA’s letter puts an obligation on platforms and providers to police this. Given there is likely to be no consumer detriment in the majority of cases where the client continues to pay the same fee but their are some changes to the mechanics of the payment of that fee, it seems an unusually prescriptive approach, bringing the clarity which would have been welcomed 6 months ago, but not within weeks of the RDR deadline.

If you wanted your book published previously you had to go through a publishing house. Publishers came in all sizes, big ones, medium ones and smaller niche, specialist ones. Not anymore.

By 2008, niche books accounted for 36.7% of Amazon’s sales.* By 2006 the traditional Pereto model of 80/20 had already been adjusted to 72/38 for online sales**, as the traditional constraints of finite storage space, manufacturing costs and ability to search were removed. This trend preceded the move to digital (Kindle, iTunes) which has accelerated this further.

Chris Anderson first coined the phrase ‘long tail’ in 2004 to describe the gradual shift away from the traditional Pareto model of distribution, to the new longer tail of distribution triggered by the digital revolution.

It isn’t all good news to aspiring authors. Quoting a report by The Times, ‘Get Publishing’ from Infinite Ideas quotes some sobering statistics from 2007 when there were approximately 200, 000 books for sale in the UK, of which 190, 000 sold fewer than 3, 500 copies. Of 85, 933 new books published that year, 58, 325 of them sold an average of 18 copies. The top 5% represented 60% of book sales.

So, a long tail no doubt, but not a particularly fat one yet, although many would argue the trend is that it’s getting fatter. What is unarguable is that a very small number of huge publishers thrive, and a very large number of niche, specialist publishers are enjoying a new found ability to distribute their books without the usual constraints of dealing with a shop which can only afford to stock bestsellers. It’s the mid sized houses who have suffered. The internet creates no real limit to the length of the tail, it goes on for ever. It’s never been easier to get published, although its debatable whether its much easier to get read. Certainly it isn’t easy making money from writing, the Society of Authors estimate the average author earns less than £7000 per annum.

Most product manufacturers base their distribution models on traditional 80/20 Pareto assumptions, expecting constant consolidation in the IFA sector. I’m not so sure that’s going to happen. It’s really difficult to grow an advisory business to significant scale. Nobody has done it successfully and sustainably despite throwing hundreds of millions at it. The few notable exceptions are not IFA models. Providing advice ultimately requires experienced people and ongoing expenditure, capital only goes so far. Regulatory costs will continue to squeeze the very small firms but I doubt we will see much of a shift at this end of the spectrum beyond a gradual increase in multi-adviser businesses. Conversely, some networks and nationals will collapse or merge. The tail gets fatter.

It’s all guesswork but it isn’t unthinkable that 80/20 could be 50/50 in a few years time. That upsets a lot of manufacturer distribution models which are shrinking sales teams and focussing in on a core number of relationships. If they have to go hunting for business again they won’t have the sales staff, the relationships, or the available margins to pick this up quickly. It’s one of the reasons why I commented on the importance of usability in a previous blog on the platform market. It’s the key to scale growth under margin pressure. Remove constraints in the way Amazon did, and you can service everyone.

The Great British Public is a very long thin tail of financial services customers, and a dwindling number of people prepared to service it. Online execution only servicing is seen as the saviour but I see a real analogy with the publishing industry here. It’s never been easier to publish a book but no easier to get anyone to read it. IFAs have had commoditised insurance products on their websites for years but only a small number of true specialists have ever cracked this market. I’ll bet the average IFA has sold less policies online than the 18 books that most authors sell. We might see some growth in the number of execution only brokerages but I don’t see much to worry Hargreaves Lansdown, not from providers, fund managers or advisers. I do see a lot of money being wasted.

Nobody has a clue what the world will look like in 5 years time. All I know is every day distribution strategies (for advice and products) seem to get narrower and retail demand gets bigger, broader and more diverse. Demand will find a way to be satisfied, maybe outside financial services. Something’s going to change.

*Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers by Erik Brynjolfsson, Yu (Jeffrey) Hu, and Michael D. Smith
**Goodbye Pareto Principle, Hello Long Tail: Erik Brynjolfsson, Yu (Jeffrey) Hu, and Duncan Simester

I was pointed to some posts last week on one of the trade press websites, which included some pretty nasty and insulting comments. Narrow that down if you can. It occurs to me that in the world of social media we are creating an environment where some people feel invincible and behave in a similar way to the raging idiots of the roads. It’s like Lord of the Flies, where a group of schoolchildren decend into brutal savagery once they put on tribal face paint. Faces hidden behind a mask, they can act out any dark impulse, even murder.

We’ve all experienced people who are a lot braver sat behind a laptop firing out emails, than they are face to face. For some reason I find people on Twitter generally considerate and reasonable. There’s something about the direct and personal nature of it which gets close to face-to-face contact. Not so elsewhere. Once someone puts an idea onto a website it seems fair game for the kind of personal abuse reserved usually for late night callers to premium phone lines. Putting an idea onto a page leaves sufficient distance between author and idea to encourage horrific and cruel personal attacks. The kind exhibited by aggressive drivers and children wearing war paint. I can only assume that the ability to hide behind an unfunny moniker (often worse than ‘anonymous’), or the feeling of invincible unaccountability which some people clearly feel when posting, is responsible for this.

Annoyingly, these people are described as ‘bloggers’, or ‘characters in the industry’. They aren’t either. Almost every post follows a familiar, envy soaked thread. It usually takes one of two forms:

Impotence – someone else has something I don’t have, so I must devalue them or it. The article reminds me that I’m not important any more.

Narcissism – someone has said something, this is an opportunity to talk about me and my business, regardless of the point being made or the fact that nobody asked me about it.

I can’t ever recall being offended by anyone’s opinion. It’s the uncontrollable need to be offensive to other people which I find objectionable.

The sad truth is that we present ourselves as an industry of angry drivers and petulant schoolchildren because of this. The FSA read these comments. Other professions read these comments. MPs are sent letters by these people. We’re rapidly becoming a parody of ourselves and wonder why we aren’t taken seriously. It’s like watching an episode of Brasseye or reading The Onion some days.

I think it will correct itself in due course, the democratisation of communication is a good thing. I can’t help but think financial services is a a place with a lot of anxiety and very little leadership right now.

That’s a real melting pot for trouble.

Especially when you’re stuck on an island, waiting for the adults to turn up.

There are two business models. The Godfather II model and the Superman III model.

In Godfather II the young Don discovers that he can earn money by using his muscle to protect people in his neighbourhood against petty criminals. His position is initially morally ambiguous. Whilst unashamably violent his acts seem to be the lesser of two evils. However, as the business grows he formalises his position as a protection racketeer and eventual mob leader, not a heroic vigilante. Many businesses generate revenue more through fear of negative consequences than expectation of positive results. It’s easy to draw analogies with big distributors, but it exists throughout most of the industry. One of the biggest mistakes you can make as a consultant or industry commentator, once you gain some profile is thinking you’re being paid for your intellectual abilities, rather than to shut you up. It’s the way it works. I kind of warm to the people that at least have the honesty to admit it. I would go as far as to say a high percentage of acquisitions in financial services have been based on Godfather II principles, usually those where everyone is left scratching their head asking “Why?”.

Superman III is a little more subtle. In the film Richard Pryor (his lowest moment) writes a programme which allows him to shave tiny fractions off every penny transacted, generating millions of dollars for no effort which nobody notices going missing. Your ahead of me already. Many of the wealthiest in our industry have made their money by carefully examining the value chain and wedging themselves into it to siphon off a few basis points for themselves. This has gone on for years and is as strong now as it ever was. Some of the proponents of the Superman III model have had to be a little more creative of late, going to the trouble of offering model portfolios here, a risk profiling tool there, or even splitting the proceeds down the middle with accomplices.

To achieve optimal results it’s preferable to operate both the Godfather II and the Superman III models at the same time. A few have mastered the art, charging protection money from product providers whilst at round the back door emptying the back book and putting it onto a platform or fund where they skim fractions of a penny.

What’s weird is how easy it is. It doesn’t take much effort to pull either of these two models off. The regulator never stops it. I’ve been around the block enough to have seen it all first hand. I’ve allowed myself to be flattered only to realise I was being ‘managed’ on plenty of occasions. I still get it, sometimes I enjoy it, I just understand the game a little better now, so don’t take it all too seriously. Most people don’t even know what’s going on.

Lots of people I know describe themselves as “control freaks” and in many respects act like they believe themselves to be omnipotent. As impossible as we all know this is, there is a strong desire to accept blame or blame others for things which are beyond all control – “If its my fault than I can control it”. Claiming to be a control freak has become socially acceptable, and in a post-Jobs world something of a badge of honour. It shouldn’t be. It’s a complex, a neurosis.

I don’t refer to myself as a control freak as it’s an expression which avoids accountability and is non specific. I have a need to take control of situations which asserts itself in specific circumstances and makes me impatient and intolerant. Specifically I get frustrated when others are seemingly indecisive in certain situations. It is very specific. I can think of no circumstance when this has been helpful. Many when it hasn’t. Arguably it was instrumental in my career progress, but accepting more responsibility is not the same as needing control. It is not a prerequisite for success. It can choke it.

Personally, I know exactly where this came from, and have learned how to spot it rising in myself. That helps me keep it in check. Sometimes, not always. Nowadays, I spot it more and more in others. In group situations, many people have different techniques they unconsciously developed to shift the locus of control to themselves. It isn’t just chest beating alpha male behaviour. I’ve observed specific individuals consistently declare themselves as ill or having “worked until 2am” before any difficult meeting to erect a barrier against anticipated criticism. Gender and age may alter the technique but the underlying issues are common to everyone. It does not distinguish between personal and business life.

I’ve met very few people who act like this intentionally, with any real understanding of what they are doing or the impact it has. In many cases the impact is minor, but in the context of thousands of interactions a week, in a family or office environment, these can be amplified into bigger issues, as others adapt their behaviour accordingly.

Families and businesses are often interlocking combinations of peoples’ neuroses. That’s why people don’t get on. That’s why people who don’t get on, do get on, when something changes. You can’t solve them but you can watch out for them. Control freaks can start with themselves, and occasionally forget to be omnipotent.

I gave in and won on the slot machines again by the way.

I haven’t found a single view to the contrary.

So why it is still so rampant?

Because of us.

Most people in financial services fell into it by accident. We can dream of a future where graduates aspire for a career in our industry but that’s still a little way off. We are here by accident, we might not regret it, but circumstance and chance played a part. Not so with professions such as accountancy and law, where a more traditional career path is established during full time education. Much of our angst relates to a sense of inferiority against these more established professions.

This sense of inferiority bred a drive toward complexity in financial services, a need to prove that what we were doing was worthwhile, valuable and necessary. It was difficult, fiddly. Jargon is simply the language we created for ourselves to amplify that complexity. ‘We’ is the important word. It’s easy to blame product manufacturers, but advisers are paid to cut through this for the benefit of clients. Compliance experts, technical experts, business consultants are just as guilty. As am I.

There isn’t an invisible machine generating jargon in financial services. We produce it, as a comfort blanket, a secret code that only we can decipher for the purpose of proving our own value to ourselves. Nobody else.

Clients and customers are oblivious to all this. They want simplicity. They neither understand nor care about our complexes. Not should they. Pretty much every financial calamity has been caused by a desire to add more and more complexity, when all anyone wants is less of it.

As we suffer another explosion of new definitions and acronyms, it’s the advisers who do the simple things well who should prosper. Adding more complexity to the financial world is pure vanity. It suggests insecurity.

The self confidence of those advisers who want to make things simpler, who don’t overcomplicate matters, is very evident. They tend to be accessible people, whose opinions are sought after. They are happy to disagree with each other, without taking personal offence. They look beyond financial services for ideas and inspiration. We need to be more like them, and remember George Orwell’s 5th rule of writing:

“Never use a…jargon word if you can think of an everyday English equivalent.”

The other 5 rules are worth a read as well.

Last year I decided we needed to invest some time and money into marketing to enhance the way we communicate to the outside world. I spent the last six months of 2011 making a lot of changes and improvements internally, but we really needed to reflect that in our marketing content as well.

What’s the problem?

Providing support services to IFAs is nothing new. When we launched in 2003 we were angry and young (well I was anyway). We were fee based, didn’t want to take a split of commission and, bluntly, thought everyone else did a poor, often overpriced, job. We thought we could do it better, and I think we did. We didn’t need to spend time and effort on marketing why we were different, it was obvious.

Nine years on and the market has matured in some ways, less so in others.

We’re still miles ahead of everyone else but many have copied aspects of what we’ve done over the years, be it the fee structure, the type of services, or even the copy used to describe what we do. They haven’t replicated how we do it, but superficially the points of differentiation are harder to distinguish. When we list what we do, most other businesses will list the same things.

And I hate lists. I really hate them. If the best you can do is to list the things you do and keep adding to it, you should give up.

After the best part of 10 years it’s easy to just keep adding bells and whistles and cloud the important issues; how you work, what you stand for, why this should matter to your clients.

That’s where we were heading. Nothing was broken, the business wasn’t struggling and our reputation had never been better, but it was time for a change. It might seem strange to tinker with something which isn’t broken, but it’s better to change from a position of strength. You can’t stand still.

Where to start?

We selected an external marketing agency to bring fresh ideas into the business. I have no qualifications or experience in marketing and I’m a big believer in bringing the best expertise I can afford in. The most valuable (and expensive) part of the process was the research. The agency undertook interviews by telephone, face-to-face and in group sessions with IFA business owners who were clients and non-clients. We did the same with staff right across the business.

The results were fascinating, and I couldn’t have got that depth and honesty of research myself. Having the results played back to us was illuminating. We spent a day collating this into a small number of key statements that summarised who we were as a business. There was nothing new. Nothing unusual, but we uncovered things which we had struggled to articulate succinctly before.

The fun bit

After this we moved to the design phase. This is the part most people associate with marketing and brand work, but it only works with the hard graft on research done first. We were keen to be bold and make a sizeable leap forward rather than slowly add in incremental change. We rejected the first design concepts as we felt they were too traditional and corporate, we wanted to bring out a sense of individuality and self confidence through something really different. We got down to one of two themes. The first used famous quotes set against dramatic landscapes. Whilst it communicated an idea of expansive thinking, it still did this by using other peoples thoughts which felt a little at odds with our need for originality, and felt it could become a little predictable over time.

The second pretty much nailed everything we wanted to say, but had struggled to find the words for. It’s practically impossible to copy. It demonstrates our belief in clear, simple, direct messages. It’s got individuality without reliance on any one individual.

It’s been a really enjoyable process getting here and hopefully you’ll see that reflected in our new look. So enough words, I’ll let the the pictures take over at www.threesixtyservices.co.uk, I hope you like it.