An abundance of potential clients and relatively little competition from elsewhere are combining to create “a golden moment” for the UK’s financial advice sector, believes Openwork chief executive Mark Duckworth.
Since he was appointed to the role in March 2015, he has therefore been working to position the network so its more than 2,000 advisers are best able to capitalise on the opportunities as he sees them – albeit with one eye on looming threats, such as robo-advice and the potential return to advice of the banks.
“If you are a financial adviser operating today, there are more potential clients than you can handle,” says Duckworth. “There are more than half a million people in the UK with £500,000 or more in liquid assets. People are therefore underserved, which means advisers are in a phenomenal space.” At the same time, he adds, the fact people are starting to recognise the possibilities of the new pension freedoms without quite being sure of how to make the most of them should lead to a greater demand for financial advice.
In five years’ time, Duckworth warns, however, things might not look so rosy. All things being equal, he suggests, the banks will be back and robo-advice will have found a footing – potential developments that both demand some serious self-analysis on the part of adviser businesses.
As an example, Duckworth suggests the delivery of financial advice is likely to evolve from primarily being a face-to-face experience to a more complementary offering that includes, for example, telephone and robo-advice. “Rather than solely relying on one approach, advisers will in future need a blend,” he says, adding that at present it is only Hargreaves Lansdown bucking the trend for face-to-face advice.
“It is obvious that when you have a population of some 64 million people and fewer than 30,000 advisers, the market is underserved, so affordability and accessibility will be key,” he continues. “From a client perspective, you want to know the advice being given is of a sufficient quality to help you make robust decisions.
“From a distributor perspective, meanwhile, what you want is a very clear set of rules from the regulator and a framework upon which that advice can be given.” As such, before it makes any inroads into the area, Openwork is waiting for clearer regulatory thinking to emerge on robo-advice.
Restricted v independent
Looking ahead, Duckworth expects to see a lot more diversity of approach from the advice sector than has been evident in recent years. Asked then for his thoughts on restricted versus independent advice, he argues the distinction has not been as important as many people had expected, adding: “It is somewhat of a lost label.
“People went into RDR thinking it would be the be-all and end-all but the reality is consumers are not that interested in whether you are independent or restricted. I would argue the real ‘flight to quality’ should be in ‘Chartered’ versus ‘Level 4 Diploma’ status.” Openwork is certainly encouraging and supporting its advisers to move towards the former.
Developing his argument further, Duckworth suggests independent advisers may increasingly choose to adopt a restricted approach. “Business models and economic dynamics are such that restricted is the approach that will work and can actually provide better pricing to consumers,” he explains.
In a similar vein, Duckworth highlights how Openwork has done a lot of work to ensure ‘consistent consumer outcomes’, which he sees as an important focus for the regulator. He is adamant that if a client were to see an Openwork financial adviser in, say, Cornwall, Scotland or Ireland then, providing they had similar circumstances, they would receive a similar recommendation and outcome.
“Advice is all about a consistent consumer outcome,” he continues. “It is about a solidity and a robustness of process that people can understand and follow. With all the big FSCS calls of recent years – Keydata, for example, or Arch Cru – because everything is centrally controlled, we can say with absolute certainty that none of our advisers recommended them.”
Duckworth suggests this may be one-way advisers can differentiate their proposition from the banks which, he believes, will sooner or later re-emerge as a force in financial advice “If they can find the right framework with the regulator, they will come back as there is a demand from the consumer,” he says.
“But they will have very different dynamics to ours. Financial advice will continue to represent a relatively small part of a bank’s profits and therefore may not be a priority. Equally, I would suggest, the fines they have had to pay are likely to live long in these businesses’ minds.”
Different challenges
For Openwork advisers, Duckworth says the challenges have changed: “It is no longer a question of finding clients so much as advisers working out how to manage their business against a capacity point to keep taking on the clients who actually are demanding their services.”
He sees pension freedoms and the current dearth of advisers as prime drivers here although mortgage advice is subtly different: “It is more transaction-based – although clients are picking shorter-term mortgages, with half of the market now taking two-year rates. That means advisers are going to be dealing with the remortgages of their existing clients at the same time as taking on new clients.” Helping advisers manage capacity in all areas of their business is thus a key part of his and Openwork’s focus.
Another important consideration is unearthing the next generation of advisers although this, says Duckworth, is actually growing easier. “People are seeing there is far more of a living to be made by being a financial adviser than there would have been historically,” he explains.
“This is because you are dealing with a small number of clients – typically 200 would be a full portfolio for somebody – and you are going through your life with these people, advising them on their goals, their dreams, their aspirations and their fears.”
Achieving the appropriate level of qualifications could be a barrier but Openwork has addressed this possibility through the launch of its ‘Ocademy’, which is designed to help people along the relevant career trajectory – from administrator to paraplanner, say, or from paraplanner to adviser. “It is all about bringing in new blood and providing a long-term career path,” says Duckworth.
In addition to the next generation of advisers, Duckworth is firmly focused on the next generation of clients and their needs. “If you think about Generation X and Generation Y, they do not necessarily want somebody sitting, in their house for six hours, taking them through a full financial plan,” he says. “It is far more, ‘I want to buy an ISA, and I want it quick. I want to understand value quickly’ – and, as ever, we have to think about how we give the client the experience they are after.”
CV: Mark Duckworth
Mark Duckworth joined Openwork as commercial development director in late 2010, gaining promotion to managing director of distribution and marketing in July 2011. He was appointed Openwork chief executive officer in March 2015.
Duckworth joined Openwork from Living Time, where he was distribution and partnerships director responsible for all sales distribution, strategy and key deals in the UK. He has also worked for Prudential, where he was distribution director, responsible for distribution throughout Europe and the Middle East; AXA, where he was national sales manager; and Scottish Amicable, where he was a regional sales manager.
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