One of the things I enjoy most about my role is meeting company leaders. What I have learnt is that being clear on your purpose is fundamental to success.
I have had several interactions lately with large firms whose senior management have very strong visions for their businesses; visions that are clear about how everyone in the value chain wins, from the customer to the adviser to the firm and the asset manager.
I recently met a chief executive who had spent weeks with his board and chairman refining their purpose before tackling the nuts and bolts of the business.
I also chatted to an industry colleague about a new venture he is launching and felt certain he would be successful because he is so clear on the value he brings to the customer and how to align advisers to that purpose in a small firm.
A great vision and purpose will be designed to ‘repel’ as much as ‘attract’ because they do not seek to be all things to everyone.Compare that with the confused pre-Retail Distribution Review business models of a decade or so ago, when it was not clear who was supposed to be adding what value where, or how the needs of the customer would be met or how the value chain should be aligned.
Go back far enough and it was a pure fight for the customer, with pension providers and insurers using commission plans to ‘acquire’ customers – and the customer having no voice in the matter at all.
Even today, you may have been unlucky enough to encounter businesses where the leadership does not understand either their customers or their advisers, with no central vision to buy into.
What does vision look like?
So, what do I mean by purpose? A long-term vision for your business that is clear on your proposition, what value it adds – to advisers and to your target customers – and how it differs from the alternatives.
Tackling this big-picture thinking now is timely because it is so closely aligned with consumer duty and its emphasis on knowing your customers and how you meet their needs, rather than trying to serve everyone.
Importantly, a great vision and purpose will be designed to ‘repel’ as much as ‘attract’ because they do not seek to be all things to everyone.
When advice firms define and refine their vision, it sometimes causes advisers to leave if their own purpose is not aligned. But it also helps firms to attract and retain the right people – and to attract customers who are clear on what they are getting and therefore more likely to be satisfied.
Once your purpose is defined, it is about communicating it throughout the company and to stakeholders up and down the company – from shareholders to the team – to embed it in the firm’s DNA.
In my own business, we work continuously to ensure everyone in every team can articulate our purpose and understand their role in achieving it.
I communicate it at every chance I get, some would say to the point of boring predictability, but then on this topic I do not think you can over-communicate.
To transform purpose into action, it is vital to make sure your team is onboard and is the best it can be.
In Jim Collins’ classic management book Good to Great, he calls this "getting the right people on the bus". Again, I have noticed a lot of progress on this front in our industry over the years, with general managers, often with adviser backgrounds, increasingly replaced by specialists bringing valuable knowledge that complements the skillset of the chief executive.
Most notable from my perspective has been an increased willingness to hire chief technology officers and/or chief operating officers from outside the industry as advice firms looking to scale recognise that technology is key to their success or failure.
As a result, firms are increasingly making use of best of breed technology rather than trying to build their own systems or force systems to do things they were not designed for.
Better technology is helping firms to become more data-driven and to take management information much more seriously. They are building data lakes to give them a real proprietary understanding of their customers, and setting clear KPIs to track achievement of their objectives.
This data-driven approach is often more deeply embedded in management practices in industries outside of our own.
It is an exciting time to witness growing examples of clear-sighted management creating the firms of the future.By embracing technology as an opportunity to demonstrate value to the client and to measure value within their businesses, firms are creating a positive feedback loop that supports the execution of their purpose.
Another area where the right experience is making a difference is in the vertically integrated firms, where exciting cross-pollination is happening as some of the disciplines of asset management come into the professional advice business.
The alignment of institutional asset management and financial planning towards a single purpose of delivering value to the end customer can be a powerful business model when harnessed well.
Our industry continues to evolve and professionalise, and it is an exciting time to witness growing examples of clear-sighted management creating the firms of the future.
When you are clear about your purpose – when you communicate it and head clearly in that direction – you achieve what Jim Collins describes as the "flywheel effect".
You attract customers who value that purpose, and you attract people who buy into it and want to work towards it with you.
What started slowly quickly gathers momentum and eventually your business is flying.
Ben Goss is chief executive of Dynamic Planner
