I have spent more than 25 years working with networks and their fantastic advisers and have seen the many benefits they bring to UK financial services, but change is now badly needed.
Many experts believed the retail distribution review would sound the death knell for the traditional network, chiefly because of the removal of commission for investment and retail products.
For many prior to RDR, membership of a network was for the financial benefit of aggregation. The networks played the role of a ‘commission club’ benefiting from the desire and in some cases need, of providers to secure business and market share.
To acquire commission ‘network rates’ as attractive as possible, panels of providers were produced, with the selected providers given access to members through a variety of ‘pay-to-play’ activities such as seminars, workshops and publications.
This in my view, created our present problem for many networks, as they became specialised event management companies, surrendering the thought leadership, marketing and influence to the providers.
Being a business owner in any sector can be a lonely place, but in our heavily regulated and legislation-laden sector there are a number of benefits of network membership for the sole trader or small business, such as compliance and competitive professional indemnity cover. But is this now enough? I believe not.
The networks of the next decade will have to offer more than compliance and PI cover. They will need to provide, among other things: thought leadership and assistance for their members in business development; a strong financial base that guarantees longevity; and technology and processes that ensure their community harnesses the opportunities we all face.
The debate will continue as we see consolidation in the network space, so while the commentators are writing their obituaries, this is now an opportunity for the remaining networks to adapt and evolve to guarantee their future.
John Joe McGinley
Principal,
Glassagh Consulting,
Donegal, Ireland
