This was seen in asset management firms with their vast fund ranges as well as advisory companies which tried to tick all the boxes from financial planning through to investment management.
But perhaps the most obvious ‘catch-all’ companies were those to comprise institutional asset management and funds businesses alongside a private client function.
Whether this worked (works) in terms of revenue streams is hard to know, but given that the model seems to be falling out of vogue it is not too far-fetched to think it might not make the most commercial sense.
Meanwhile, an increase in disparate regulatory pressures for different parts of the industry mean running a broad business requires executives to be au fait with, and to pay for the compliance of, it all.
Divide and conquer
The latest example of a company choosing to split into its component parts is that of Veritas Asset Management, which has announced its private client business will now be called Veritas Investment Management.
The firm said the division would “enable the two businesses to focus on their respective client needs, while managing growth and dealing with different regulatory requirements and strategic objectives”.
Another example from earlier this year is Walker Crips Group, which sold its asset management business to Liontrust Asset Management for £12.3m in order to concentrate on its core wealth management business.
More recently it also disposed of its subsidiary Keith, Bayley, Rogers & Co to plough the cash back into is wealth management offering.
Elsewhere we’ve seen plans from Lloyds to sell its stake in St James’s Place to build up its core capital and focus on its retail banking business, while wealth manager Quilter has merged with DFM Cheviot to offer a more compelling private client proposition with more than £12bn in AUM.
In the post-RDR world the FSA wants to see clients at the centre of financial services propositions, so it makes sense to hone in on the clients you want and the services they desire.
Innovation out of chaos
As in the respective worlds of cookery, publishing and the consumer services industry, it is no bad thing to identify a niche and serve it well.
If some of the trends expected to come into fruition in the new regulatory landscape do so advisers and investors will be seen to place less of an onus on independent vs. restricted and more of an emphasis on chartered or certified status (ie professionalism and qualifications).
This could lead to a greater number of the community choosing to offer a restricted service either in terms of products and services they advise on or in terms of the client-base they hope to attract.
In the US where the shift from commission-based to fee-based advice took place a number of years ago, firms have already started to specialise. With companies like LearnVest targeting a tech-savvy, female audience.
The time for maligning business model changes prompted by RDR is over. So let’s get excited by them instead. They do say innovation comes from chaos after all.
Look out for more on cultivating a specialism in December’s issue of Portfolio Adviser magazine, out soon.
