Tim Sargisson: The real key to your business’s sustainability

For many advisers, business sustainability revolves around a ruthless focus on technology but, argues Tim Sargisson, while new technology comes and goes, the principle of being customer-centric remains

It was a pleasure to be asked to be a panellist in a recent roadshow discussion on the subject of business model success stories. Chaired by Personal Finance Society chief executive Keith Richards and entitled ‘Different questions, difficult decisions, healthy debate’, I had the chance to talk about Sandringham in terms of the sustainability of our business model.

For us the answer is easy. The simple fact is that – for us and for thousands of other businesses – the key to sustainability is to build a business with scale that is truly customer-centric. In this respect, and whether you choose to believe it or not, our profession is no different to any other business in terms of what drives a successful enterprise.

Certainly we can talk about the challenges of working in a regulated environment but to understand ‘customer- centric’ is therefore to ensure everything is completely aligned with what the regulator expects to see in terms of delivering good customer outcomes. – and with an absolute focus on the needs of the customer.

From my many years in the industry, I recognise this is precisely what large numbers of advisers understand and want: to put the needs of the customer – your clients – at the heart of their business. Many advisers, however, find themselves frustrated in their efforts by large amounts of administration and other distractions that prevent them from devoting sufficient time to deepening client relationships or sourcing new clients.

I do not want to be the bearer of bad news but the demands of the second Markets in Financial Instruments Directive – that is, MiFID II – and the roll-out of the Senior Managers and Certification Regime is only going to make this a whole lot more challenging for legions of advisers.

A business that sets out to support advisers to build proficient, profitable, future-proofed businesses is designed to ensure an adviser’s clients are enjoying the support they need and the value for money they demand and deserve.

This is based on a premise financial advice is best delivered through a network of professional advisers, who have been provided with the tools to allow them to get on with what they do best – giving advice. The sustainability of financial advice as a business is inextricably linked to the success of the adviser in delivering great customer outcomes.

Biggest threat

For a lot of advisers, the answer to the question of sustainability will revolve around a ruthless focus on technology. Of course, technology is important because you cannot build a business with scale without really good kit. The important point, however, is that technology by itself is not the real disruptor – being non-customer centric is the biggest threat to any business.

Take the case of Netflix. ‘Netflix kills off Blockbuster’ is now the accepted narrative but the facts are rather more prosaic: Netflix on its own did not kill Blockbuster – ridiculous late fees played a huge part.

The story goes that Reed Hastings had the idea for Netflix after Blockbuster charged him $40 for the late return of a rented copy of Apollo 13. His response to the belligerent staff at his local Blockbuster was to find a better way of delivering the service and the DVD mail order rental service was born. This ultimately spawned a multi-billion dollar business, while Blockbuster crumbled to dust.

New technology comes and goes but the customer-centric principle remains. If we look at any disrupted industry or business, we will always find an underlying customer-related problem, stated or unstated. Customers are always dissatisfied, even when they report being happy.

So ask yourself – and keep asking – is your business truly customer-centric and is this aim reflected in your core focus and core values?

Published on 19th September 2017