Kit Bags, Big Sticks and being in “the shadow of regulation”

In the middle of 2012 a financial ‘advice’ business sold for 87 million pounds.

Whilst this sale was widely reported in both the mainstream and financial press (the guy who set the business up is a bit of a PR expert) it pretty much passed the traditional financial planning and advisory world by, with only a ripple of reaction in the financial world.

This may be because of the fact that we’re bombarded by noise, in the form of ‘news’ (where most of it isn’t really), everyday.

It may be the fact that in certain parts of the profession (or industry) we call advice (or even planning) there is a certain amount of snobbery.


It may be that many of us didn’t consider this business to be about ‘advice’ at all.

By now you might probably guessed but I’m actually talking about…

Money Saving Expert, Martin Lewis’s site.

“Hold on Chris” you might be saying “Money Saving Expert isn’t about financial advice. It’s about saving money on day to day expenditure, or reducing household bills, or reclaiming PPI.”

“Hold on yourself!” I might say, trying to sound both polite and robust at the same time “Most of us live in a professional world where our clients have already ‘made it’ from a financial perspective, or at the very least are well on their way there. Whilst they might appreciate our guidance and support, actually, they are the individuals who need a professional financial planner the least!”

“Most people” I might continue “Don’t ever worry about lifetime allowances, or fully topping up tax free wrappers, or regularly maximising pension contributions.”

“Most people” I might proclaim “Worry about exactly about the topics that Martin talks about on his website. Balancing monthly budgets, saving money on regular expenditure and using vouchers to enjoy a night out with the family every now and again. If this isn’t ‘advice’ I’m not sure what is!”

I know there is usually some debate on what ‘advice’ is and whilst it’s an interesting subject I’ll save this for another article. For the purposes of this article I’m using ‘advice’ as it’s defined in the (Oxford English) dictionary…

Guidance or recommendations offered with regard to prudent action.

Also, I know that many reading this might roll their eyes when hearing Martin Lewis’s name. You’ve probably got your own reasons for this. However before writing Martin or his website off consider this.

He has done more to stimulate public conversations about money in the UK than anyone else in the past 20 years.

Whilst you might disagree with his opinions or his approach you can’t deny that.

Even many of our clients, with their (relatively compared to most people) large pots of assets, are not concerned about the technical, their concerns are based on human emotions.

For all of us regardless of how much we’ve got in the bank Fear, Desire, Hopes and Dreams are far more compelling than Allowances, Regulation and ‘product’.

So, one of the most effective financial ‘advice’ models in the past 10 years was highly profitable, seemingly built on a desire to help, web based and..

.Non Regulated…

Which after going round the houses a bit brings me to my question…is regulation doing ‘the job’?

I understand the need for regulation.

I like the fact that it’s designed to stop bad people doing bad things and provide nudges for people who might be tempted to.

I like working in a regulated environment and also think the ladies and gents at the FCA are well meaning and want to do a good job.

I also like the fact that more recently the FCA are exploring subjects you don’t traditionally expect them to (on that note occassional paper 1 is worth a read).

However I’m not convinced that current regulation takes into account our changing world, maybe this is due to the regulators historic focus on products, maybe it isn’t.

As Phil correctly concluded in his article the future of financial journalism is changing but it’s not the only part of our professional environment which is in a constant state of flux.

Martin Lewis’s site has proved that a non regulated ‘advice’ affiliate model can work if you can generate enough brand awareness and visitors to your site, through giving useful information and providing useful tools.

I’m wondering how long it will take for a new technology based mass market model to come into play which instead of helping people with their immediate financial needs, focuses on helping with their longer term financial goals?

 Not one based on ‘product distribution’ but one based on true planning. One based on coaching people to a better financial life (one example I considered is here) as opposed to selling them a product that they might need, or might not!


Maybe regulation is holding us back from moving forward.

The nature and size of market regulation is that new ideas, and especially from the individuals who fall within the remit of the regulation, are potentially stifled due to the fact that the new concept might not fit within the remit traditional rule book.

However if the rule book is built on a legacy of ‘product’ are new ‘non product’ business models being subdued due to the ‘shadow of regulation’.

As always I’m not sure of the answers but I like the idea of raising the questions.

So, what do you think?

Is regulation as effective as it should be? and is it evolving in pace with changes both in the market and Technology?

If unregulated ‘advice’ models can be run ethically and profitably whilst talking about non regulated products is regulation stifling the emergence of more interesting and diverse business models in the financial planning space?


Whilst a ‘big stick’ approach might be a necessary tool in a regulators kit bag, does the fear of this ‘big stick’ stop ethical and effective new business models to emerge? Or is the prevalence of the regulators ‘big stick’ actually a fallacy used to promote ‘product’ by certain interested parties?

As ever I’m interesting in hearing your thoughts…


8 thoughts on “Kit Bags, Big Sticks and being in “the shadow of regulation”

  • Great post Chris. You guys no more about regulation than me, but I do have some strong views on Martin Lewis, his success and what advisers/planners can learn from it.

    Essentially he was the right guy in the right place at the right time, that has worked incredibly hard to make something sustainable from it. We all know what a powerful combination opportunity and hard work is, and he exemplifies this.

    But he hasn’t done anything that any advisory firm couldn’t replicate. In fact it was this epiphany that led me to leave Aviva and start my business.

    A positive feeling for your firm encourages clients to come back for more, refer you, have higher sales value and not consider shopping around. All of which are tangible and can be measured on your bottom line.

    Advisers that know their target market, know this means creating a community of people that like you, and that is very very valuable. Exactly as Martin Lewis has done this on massive scale. Over 13 million people open his email or visit his blog every month.

    But this scale has its limitations. The 2013 Digital Influence Report suggests 54% of consumers believe a small highly engaged community has a greater influence on their buying decisions than a larger less loyal community. In fact, only 12% believe a larger community is more influential.

    This insight is incredibly important and incredibly good news for advisers.

    It means you don’t need thousands of followers in social media. You just need to find your local influencers that can drive and create very small yet loyal community to talk about your firm.

    With so many people connected through social channels, your leads are only one person away. A small and highly loyal group can reach far better new business opportunities and be much more compelling than a large army of wishy-washy folks who follow a brand like Aviva on Facebook or their Barclays on Twitter.

    You know people buy from you because they like you. Your clients are influenced most by people they know. So all you need to do to replicate Martin Lewis success in your area is figure out how to influence the most popular people they know.

    BTW, how was Question Time last night? What happened to the guy that stormed out?

    • Hi Simon,

      You make some fair points and I agree that you don’t need to have a big brand behind you (like Aviva) anymore to have influence and in actual fact being connected to a big brand, depending on your audience, can be a detrimental factor!

      I think the points you raised about advisory firms is interesting (we’ve benefited from having a regular readership and following from the content we generate) however I reckon part of that is we consciously try to avoid any form of ‘product’ conversation…or it might just be our stuff is a bit strange! 😉

      Thanks for the comment Simon,

      p.s. QT was great fun although I was desperate to ask a question and didn’t get the chance.

      Also, that guy who stormed out was just in front of me!

      I’m sure it’s an experience I’ll draw upon soon enough!

      Cheers again!

  • Good discussion Chris. There are online models in the US like which signpost the future I believe.

    The currency of the internet is knowledge. Those who provide knowledge in an accessible way for those looking for it, will be the winners. That is definitely how Martin Lewis made his (deserved, in my opinion) millions.

    The difficulty is that advice is slightly more than just knowledge. It is the application of that knowledge towards another’s specific situation with a view to helping them move forward with their goals. As advice is so often bound up with product solutions, that’s why we need the regulation we have. I haven’t yet come up with a way of advising people in a truly non-regulated way that doesn’t sail too close to the wind!

    I get visitors to MeaningfulMoney asking me frequently about how to apply the knowledge they have learned on my site to their own situation. Of course I have to tell them that I can do that, but only through the regulated channel of Jacksons Wealth.

    I would love to see the regulator proactively finding ways to allow advice to evolve for the new, online world. I would jump at the chance to be a part of those discussions.

    Like you, I believe that regulation is good, and that for the most part the FCA are doing a decent job, but there needs to be an evolution to keep pace with online developments.

    • Hi Pete,

      Learnvest is a model and a half! (I wonder if there’s any plans to bring this it to the uk!) and I like the fact that it’s technology backed up by a qualified professional.

      Fee Transparency is vital too and it seems that it’s got that (and the fee’s are at a relatively reasonable level).

      The model looks good and it’ll be interesting to see how many people actually have signed up….I’m going to do some digging! 🙂

      I agree that the currency of the internet is knowledge.

      However there is so much out there that just knowledge has been devalued to a certain extent….so I believe for your knowledge to stand out you’ve got to add something else.

      For different people it’s different things but I believe that however you choose to do it you need to separate yourself from the ‘noise’.

      I agree that advice is slightly more than knowledge but both you and I know that for most people (and especially the younger generations) the advice you’d give is actually pretty basic and may not require any form of product at all for some time. All they might need is a helping hand to keep them on the right track and help them continue to make good decisions.

      It might be worth starting a dialogue with the FCA (who I agree on the whole do a good job) about this sort of stuff!

      Cheers for your comments Pete, as ever an incredibly useful contribution!

  • Certainly here in 2014, the mass market looks likely to be best served by an educational, DIY online model, with interactive but simple tools. However, playing devils advocate…this is surely exactly the business and market development that the regulator has suggested they wish to see….and it’s happening, we have collectively been forced to evolve.

    Most of us have a tendency to forget. We forget that we have been collectively dragged from a cottage industry of disjointed, poorly informed, hunter gatherer types into reflective, service driven, analytic managers of risk. The stick has worked and is working, much though we might like to think otherwise. An entire industry of high quality support services has evolved with consultants in all aspects of our industry many if whom I would thank enormously for their contributions and constant drum beating. They are the friendly, palatable face of regulation fused with business acumen.

    The birth or rebirth or evolution of anything is a painful process and in practice if you are with me, it’s an ongoing lifetime of improvement. I’m not convinced that the mass move would have occurred had it not been for regulation, for all it flaws of failing to focus on the biggest offenders creating the largest problems. despite this, the collective standards bar has been raised in all elements of our daily business lives. Heck we been collaborate on sites like this, back in the day most thought they could conquer Britain serving 20million “clients”.

    Of course there are still some hanging on to their old practices, like some accountants or lawyers who begin to stand out like… Well you know they aren’t getting to serve any of your clients.

    However, despite all the genius, data, professional skills and certificates, people buy people and this is what the online world lacks…unless there is a genuine, relatable person that has a real world presence… Like Martin Lewis. Of course not in every circumstance, but people still seek trusting relationships. Whilst I agree with Chris that most of our clients have made it, they do need our help, not because of the answers, but because of the questions and the crafting and artistry of the answers, solutions, options and thought. Ironically we have moved from cottage industry to artisan….the danger being that the internet can only market the artisan, not be one.

    • Hi Dom,

      A thoughtful and considered response and from you I expect nothing less!

      However if we look at the entire market I’m not convinced that our profession (or an industry in parts) as a whole is moving in the direction you suggest.

      I agree that many of us have made the transition from disjointed “Hunter Gatherers” to reflective service orientated business owners (I know I am, and continue to make this move).

      However I’d suggest that network consolidation (and provider ownership of these businesses) and the whispers about the emergence and building of a bunch of direct salesforces by providers would suggest that the “Hunter Gatherer” model is far from dead!.

      We surround ourselves with like minded people and therefore if you deliver a service driven, transparent proposition it’s likely that you know more of these types of people…..but let’s not pretend our community reflects the entire market.

      You may be right, the noises the regulator makes might be ones we like. However if that is the case why are we not seeing more innovation in this market.

      Is it due to a perceived fear? or is it because there’s no consumer demand for this service? or is it that no-one’s put enough time energy and effort into a solution which might work? I’m not sure

      I completely agree that both personal, professional and industry evolution never stops and neither should it….

      However what Martin has proven is that if you can build a strong personal and personable brand which people can truly connect to this can be enough to develop a relationship of trust which allows you to help people without ever meeting them directly.

      It’s definitely not easy. But the fact that it’s possible is really exciting!

      Thanks again for your comments Dom.

      • Hi Chris. Perhaps you are right, maybe I am surrounded by decent advisers and maybe they aren’t representative of the whole. My context is really only who and what comes in front of me. The amount of “rubbish” advice or service that new prospects have received is miles less than it used to be, so together with exams, RDR I kinda assumed pretty much everyone was improved considerably.

        In terms of development and market evolution. I guess it depends also on what you look at. When you think about the tools we all have these days… I think things have changed enormously. There was a time when the Skandia MultiFund ISA was the best chance of diversification. We now have an entire industry built on the concept and haggling over price, best execution and gizmo tools.

        In terms of products, little has changed, with the exception of flexible drawdown. In terms of service to clients and the ability to DIY, we have gone from jo public using a rulers and copy of a money magazine to online tools to sift funds and drill into reports etc.

        There are online offerings, but as far as I’m aware nothing all encompassing as an advisory service here in the UK. You and I know its expensive to provide regulated advice, its expensive to develop IT and its generally better to let others develop the kit, unless you have very deep pockets and an ability to take market share. This will clearly evolve – even AXA DIY investing have someone on the phone or pop up to “help”… presumably with guided but not guided sales..

        I’m very much convinced by the argument that anyone that simply transacts business has a limited shelf-life, as products can be bought online. The value lies in the planning. I’m preaching to the choir, I know. But I can see a platform develop where various experts could see a clients FF or portfolio and be Skyped for one off fees… rope in a tax specialist, pension guru, lawyer, investment analyst… pay as you go, compare fees/expertise…I can imagine it anyhow..

        The Martin Lewis stuff is different, apart from looking awful, (rammed with stuff) its generally a forum for sharing tips…easy to build, but very tough to regulate. Everything from pizza vouchers to travel insurance…. financial education yes, planning, heck no. Its a start. He also has the advantage of being on TV and radio… a Key Person of Influence. So he has the march on most of us as he’s already a “celeb”. People surely connect because of the offline persona, not the online one. Its the offline that creates the trust and online is merely a continuation of it, not the other way around..

        We know from Pete (and you) that podcasts and video have an obvious place, social media thrives on content, but most simply aren’t up to the constant attention this appears to need… and how many times can people watch a video that explains what a pension is again? engagement is the silver bullet. I’m sure some bright spark out there can devise a way to do this en masse, but for the likes of me, engagement probably means, trust, local, small and deep knowledge, limited by real-time ability to be with clients, which must limit the number that can be looked after… which determines…and so on..

        That said, I’m game to try new stuff if you reckon there’s a way.


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