As we see a raft of commentators heralding the death of the network model it is perhaps time for networks to reflect and decide what is their future rather than their obituary.
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 specialists believed RDR would sound the death knell for the traditional network, chiefly because of the removal of commission for investment and retail products.
Prior to RDR, membership of a network was mainly 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 attractive commission ‘network rates’, 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. They did this while cosseted by a false sense of security about commission rates which they believed aided retention and acquisition – commission that RDR has now removed.
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 to be had from network membership for the sole trader or small business: compliance, competitive professional indemnity cover, process development and training support. But is this now enough? I believe not.
The successful networks of our profession share a number of key attributes that the others would do well to research and adopt.
The networks of the next decade will have to offer more than compliance and PI cover. They must evolve into real business communities and provide thought leadership and assistance for their members in business development, marketing, technology and, increasingly, social media.
If a business community abdicates the intellectual growth of its membership to others in return for financial compensation, no matter how it is dressed up, how do you define the future direction of your model?
As it stands, the future direction of far too many of the existing network models is at the mercy of competing providers with their own strategic interests at heart. The networks of the future need to have a collaborative relationship with the remaining providers but they must also seize more control over their own strategic direction, becoming adviser-centric with the growth of their community at the heart of their existence, a culture that grows and develops every individual and business in its community
The average age of UK financial advisers is a matter of great debate, but the latest research shows it currently stands at 54. How many will we have in five years’ time?