From all the TV and Film, and specifically comedy, I’ve ever watched there are only a few scenes which stick in my mind…
and The brilliance of Barker and Corbett in “Four Candles”
AsI read this recent article by Phil Young I couldn’t help thinking of the latter… You see in this article (entitled “We don’t need innovation”) Phil suggests that, erm, we don’t need innovation.
It’s strange… Like Corbett and Barker, I find myself mentally making many of the points Phil has made but completely disagreeing with the conclusion.
Phil wants to repair his gardening equipment and I want some atmospheric lighting for our upcoming Halloween party… We’re saying the same things but coming to different conclusions!
Let me explain… Phil makes a number of points I’d agree with.
You can’t call for innovation, especially if you’re a regulator. Innovation happens (and is happening) organically in the marketplace. No arguments with this!
Phil also talks about the fact that the technology and the business models already exist and have done so for some time. Agreed and shown to work in a bunch of different professions!
Phil also suggests that the FCA whilst talking a good game on innovation might be a barrier be it real and imaginary (Phil suggests that the barrier is real in his article…I’m not so sure) in the minds of many who want to innovate. This sounds about right!
Phil also suggest that automated low cost low touch advice is and has to be scale game. Correct!
and then (and this is the bit where the way we see this splits as quickly as your typical Hollywood marriage)…
Phil suggests we need to ‘fix the basics’ before we move onto look at innovating the market.
I’m not convinced this is true… Is see a market where most people don’t get efficient financial guidance, support or advice. What I see is an advisory community with massively invaluable experience.
However with business models which are understandably built on managing and protecting the wealth, on the whole, of the most wealthy of our populous.
Business models which are highly unlikely to be impacted by any sort of innovation in the market (the fuss about ‘robo-advisers’ decimating financial planning businesses is absolute nonsense! You just need to look at population numbers compared to the numbers who actually receive advice to see that).
What I see is a broken market….and a market which needs innovation above anything else!
I also see a world where innovation never happens once “basics are fixed”. The relationship between these two things are never that linear.
In the financial world there’s a bunch of examples where innovation happened and either sidesteps the basics or fixed them retrospectively. I’m thinking specifically about the growth of peer to peer lending, Crowdfunding and Factoring.
Innovation is messy. It doesn’t happen when the basics are fixed. It happens when someone comes up with an idea which might work and tries to overcome the hurdles to get there.
I agree that a risk adverse regulator, the capacity to get the guidance wrong en masse due to a systemised approach (and the risks associated with this) and the minimum level of qualification are barriers but not ones which can’t be overcome!
I’d also question the conclusion Phil has come to in relation to “Project Innovate“… The way I see this is that the FCA come out and confirm they want to help firms with the intention to support firms who want to innovate.
Phil who seems to suggest that their needs to be an wholesale attitude change within the regulator before true innovation occurs. I’d suggest that whilst the project innovate project seems to be a gradual move in the right direction and any wholesale change in regulator attitude will take a decent amount of time and actually be influenced by innovation within the market.
In this marketplace, the chicken (a change in regulator attitude) or the egg (innovation) won’t be first…it’ll be a combination of the two which solves the problem. A chicken omelette type of solution!
Every time I think about this my mind thinks about two things…
Around London, from St Katherine’s docks via the Google Campus to the Sillicon roundabout, are bunches of people with unique innovative ideas looking to build businesses. These people are concerned about finding new ways to solve the problem.
These people don’t view regulation (or regulators) with fear but with flexibility and often get involved in active engagement. Whilst this might be considered Naïve I’d suggest that there are a bunch of examples of where this seems to be working (Nutmeg in the UK and Learnvest in the US are two of my particular favourite examples).
Many of them will fail (the nature of new business especially in the tech sector) but a few will build businesses which change the game in the particular sector they decide to focus on…
How long will it be before one of these firms changes the game of low cost / low touch financial planning? or has it happened already and we just haven’t heard about it yet?
The second thing my mind wanders towards is the issue at hand.
The issue isn’t robo advisers, or innovation, or regulation….but the problem which a combination of these things could help to resolve…
How, in a country as wealthy as ours, why do millions of us who need it don’t have access to any form of decent support in managing our money and a easy, compelling way to start accumulate wealth?
Surely by focussing on the problem we’re trying to solve instead of the potential barriers in the way we’re more likely to make progress.
Call this progress what you want. Evolution. Innovation. Steve.
I believe this should and will happen…
But what do I know…I’d use Fork Handles to light my room!