The word ‘legacy’ has many meanings.
According to the Oxford English Dictionary, it is either ‘an amount of money or property left to someone in a will’ or ‘something left or handed down by a predecessor’.
These financial meanings of ‘legacy’ are often connected to success. The alternative meaning is one linked to technology, where it is used to mean obsolete or old.
It is often right to use the latter meaning when associated with certain financial products that clearly belong in the past. But the platform market is relatively new and so, by definition, it is counterintuitive to talk about ‘platform legacy’ as being outdated.
For those platforms reporting their true assets, any ‘legacy’ will clearly be assets invested in products that are relevant and open to new business. This kind of legacy is positive and, like an individual’s wealth, it is a marker of a track record.
Let’s consider it from an adviser’s perspective. Would it be a bad thing to have the same client for 20 years? I think you would consider them one of your best clients and be proud of them as your business legacy.
We feel the same. We are very proud of the legacy we have built. The continued support of financial advisers has resulted in more than half a million customers entrusting their financial futures with us.
We have never lost sight of the importance of putting the customer at the heart of the proposition. Sometimes, this means doing what is right, as opposed to taking the easy option for our own benefit.
A good example is the subject of rebates. We have sought to ensure our existing customers continue to benefit from the scale of our legacy.
Prior to the RDR, Skandia had secured, what the market believed to be, the best rebate terms available. We were never going to turn our back on these discounts simply because we could no longer retain these rebates ourselves.
As a result, our existing customers can remain invested within their existing bundled share classes, but now they receive these rebates in full, reducing their total cost of ownership in the process. The easy option would have been to walk away from negotiating discounts with the groups.
How a business treats its ‘legacy’ is important for intermediaries. In the murkier areas of financial services, the relationship between customers and distributors has often been based on exploitation.
The world today is different. The customer is now more powerful than the company, and information, particularly on service, can be shared instantly through social networks. Customers will constantly seek more efficient ways to conduct business, possibly with no advice involved.
We recognise that these customers are our legacy. So if changes are required to our existing platform business – for example, as a result of the PS13/1 rule changes – we ensure advisers and customers are engaged and involved in the process.
Platforms aren’t technology businesses – that’s why nearly all choose to outsource those elements. They are financial businesses.
It’s time we started considering the financial connotations of the word ‘legacy’ when assessing behaviour or success.
Peter Mann is vice chairman at Old Mutual Wealth