But while this may appear to be a relatively simple task, constant regulatory changes have ensured that his 27 years in the profession, including seven years at Sarasin, have been full of challenges and alterations. Of all the shifts in legislation, he says the RDR has proved the biggest threat to his duty of foreseeing future trends. That said, more than a year after the RDR’s implementation, he appears confident with the task ahead.
Mr Thompson has his own strategies for communicating with advisers. He was keen to emphasise that he is not a big fan of mass market roadshows – the “travelling circus”, as he puts it. The ‘pay to play’ concept is not something that Sarasin was keen to emulate, although that does not mean Mr Thompson and his colleagues do not meet with advisers and invite them to more low-key workshops.
Instead, he claimed that his focus is on working closely with a small number of advisers with whom he shares “great synergy”, and discussing the ins and outs of the profession with “eminent figures”. These interactions have led him to one or two conclusions about how things are likely to pan out, and he insisted that Sarasin is at the forefront of providing the solutions of tomorrow.
Outsourcing propositions are notably growing in prominence as a result of the new rules, he said. While he believed this was a good thing, he was concerned that the selection process was not sufficiently thorough. Advisers, he added, should look for discretionary fund managers that fit their corporate and client model – or risk upsetting the regulator and the Financial Ombudsman Service.
He said: “For many years, advisers have been second-guessing fund managers and trying to be part-time fund managers, but they have now realised that it can’t be done, because fund management is a full-time job. So, many will now outsource to discretionary fund managers.
“The question is, do they have the proper processes in place? Are advisers being selective enough when selecting a discretionary fund manager? DFM outsourcing is good, but be careful how you go about it. Do it with a well-thought-out process and long-term strategy in mind. Make sure you understand the risk and the process of DFM.”
Another observation made by Mr Thompson – also in line with pre-RDR expectations – was that restricted advice models are now the reality for most intermediaries.
While some have warned of the difficulties behind retaining clients with the new label after years of telling consumers that independent is best, Mr Thompson sees no difference between IFAs and restricted whole-of-market – and he believes clients will understand this.
According to his understanding, the majority of pre-RDR IFAs did not fit the regulator’s new independent definition, and the term ‘restricted’ is definitely not the best way to describe this inevitable but equally respectable advice process. Regardless of the speculation, he claimed that a client would be happy if an intermediary explained that the best investment solution is found by carefully researching several providers in accordance with the FCA’s criteria.
Mr Thompson also predicted that a sharp increase in restricted advisers will force the most savvy to mirror St James’s Place’s successful model of vertical integration.
He said: “If you are an IFA of yesterday with reasonable scale, you are likely, in time, to become vertically integrated with your own range of products and services. The more savvy advisers today, and growing numbers tomorrow, will understand this.”
With big changes expected to shape the advisory landscape over the next decade, the eventual scenario, according to Mr Thompson, will be a greater focus on “solutions alpha” and defined targets that closely match each client’s objectives and expectations.
Asset managers, added Mr Thompson, will be tasked with producing products with specific investment outcomes that cater to contemporary needs, not obsessing over fund performance in relation to peers.
He said: “Asset managers will provide solutions alpha, rather than the traditional ‘our funds have got more than yours’ approach. Construction of outcomes that deliver what clients are looking for is the new alpha, and investment outcomes will be carefully tailored to each client’s suitability profile.
“The weight of numbers now – in terms of people and assets and the number of more sophisticated advisers and propositions – will enable advisers, when collected together, to achieve finely tuned outcomes.”
And while the asset manager raises his efforts to provide more adviser- and client-friendly propositions, Mr Thompson said the intermediary will have more time to focus on his core strength of building long-lasting financial relationships. The adviser’s responsibility, he claimed, will be selecting partners with well-tailored products, not picking funds and predicting stockmarket performances.
He added: “The adviser will be spending much more time with clients creating propositions, which is where they can act as a long-term financial coach and do their damndest to make sure Mr and Mrs Jones’ objectives are delivered.”
Career Ladder
2010 – present: Sarasin & Partners, business partner and head of strategic distribution
2007 – 2010: Sarasin & Partners, head of wholesale UK retail distribution
1997 – 2007: Morley Fund Management, head of strategic alliances, head of financial institutions and creation and management of Morley’s wholesale business in UK
1995 – 1997: Scottish Equitable Asset Management, investment specialist
1990 – 1997: L&G Group and LGIM, regional sales roles becoming national accounts manager
