Crash bang wallop... What a year 2016 was - and what a year 2017 is already shaping up to be.
The past few months have been a rollercoaster for all of us, not just because of the obvious events of Brexit and Trump, or the crisis in the Middle East, but the many events right here in UK financial services.
We have seen material consolidation events across the advice, wrap and self-invested personal pension (Sipp) sectors as players look to position for the next five years.
Clearly many owners felt they could not compete due to capital, scale, investment requirements, or just plain old quality of the opposition.
It could be said that everything has been thrown up in the air. Who has the capital, the technology, the competence, and the proposition to win? These are the questions on the lips of the ‘buyers’ of services from this market right now.
Let’s not to forget my beloved Rotherham United who managed another great escape to stay in the Championship for another season!
Will consumers ask the same questions of financial sustainability, trust, and proposition that are being asked of traditional providers?For my part, I led the Embark Group through a series of five acquisitions and a major technology implementation during 2016. These have transformed us from being a mid-scale bespoke Sipp and Ssas provider, to being a material scale SME responsible for £8.2bn of client assets through pension, investment, advisory, employee benefits and wrap solutions.
We are now players in the middle of a market where what I believe are the true impacts of RDR coming into effect.
The tectonic plates of politics, pensions and platforms will continue to shift at pace throughout this year.
I expect we will see three or four more acquisitions in the Sipp space as its consolidation largely completes, another two to three ‘wrap’ deals as the lack of scale bites the smaller players, and the political uncertainties around us may prompt a few fund management houses to realise that not everyone can produce consistent, sustained returns.
The big story however will be the invasion of the ‘Robo’ advisers. If measured by ‘PR’ noise and market RFP activity, we could see over 30 new entrants into this new space over the coming months, each vying to present their proposition as the most ‘consumer focused’.
No doubt the user interfaces will be fantastic, no doubt pricing will look attractive, no doubt there will be arguments that machines can replace humans, but the question is will consumers ask the same questions of financial sustainability, trust, and proposition that are being asked of traditional providers?
They should, even more so than before. For the new entrants themselves it is a long, long road to profitability so 2017 will be crucial as to whether they survive for the long term.
2017 will indeed be ‘Robo Wars’ in my view and I hope to be in the supply chain to the winning competitors, after all I am not paying the marketing bills!
Last but not least, 2017 started with Rotherham flat bottom of the championship and favourites for relegation again. Here's my prediction: just watch as effort, belief and teamwork defy the odds once more for the boys to stay up.
Phil Smith is chief executive of the Embark Group.
