Who are you competing against?

Wise heads in our business regularly tell us to up our game in order to fight off competition. One of the objectives of the FCA appears to be to increase competition between advice firms.

Out here in the sticks, competition for clients has reduced substantially. In reality, we have never had stiff competition from other independent advisers; our competition has generally been from the banks, St James’s Place and a couple of stockbrokers. The banks appear to have given up trying to give financial advice altogether and the stockbrokers seem to be spending most of their time bringing their paperwork up to scratch for their existing clients. That leaves St James’s Place as the only serious competitor for our clients (and I don’t think that I would describe their version of advice as the same as ours).

Or does it? Our main competition is actually “not getting advice”. Clients who don’t like us don’t generally go off to another adviser, they tend to do nothing or do something without taking advice (sometimes with a helping hand from Hargreaves Lansdowne or some other website).

Rather than gearing ourselves up to compete against other providers of financial planning and advice, as the FCA insists that we do, and the consultants urge us to, we should spend resources fighting the real competition – “not getting advice”. And we should be worried about this competition – “not getting advice” has plenty of resources (and we are paying for some of it – the Guidance Guarantee and the Money Advice), its PR department is excellent (it regularly gets the press to have a pop at the advisers who compete with it), and its costs are much lower.

Remember Blockbuster Video? As the leader in the video rental market, they’d worked out how to beat their competition. But they didn’t see that “not hiring a video” was the real competition.