Driving Change in a Changing Industry Andrew Fisher – Chief Executive 13 th October 2011.
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Transcript of Driving Change in a Changing Industry Andrew Fisher – Chief Executive 13 th October 2011.
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Driving Change in a Changing Industry
Andrew Fisher – Chief Executive 13th October 2011
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“In times of change, the greatest handicap is experience”
John Paul Getty
Background
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• An awful industry doing terrible things• Low company morale• Series of poor corporate ‘transformations’• High staff turnover• Mis-selling endemic• Poor economics – small and loss making• Wrong culture/attitude
Background
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Sir Callum McCarthy, chairman of the Financial Services Authority, said the system "fails miserably" to create long-term relationships with customers and questioned whether it served the interests of banks, insurance companies or independent financial advisers.
Financial Times, September 18th 2006
“I note that as at May 2006, the top 21 IFAs had turnover of £640 million, but operating losses of £22 million – twice that of a year earlier”
Sir Callum McCarthy
The Market
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The IFA Industry was addicted!
IFA Commissions Life Companies
• Totally dependent • Need status quo
• No way out/capital • Feed on dependency
• Leads to non compliance • Exploit wherever weakness
‘Addicts’ ‘Drug Dealers’
And very poorly qualified!
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Strategically • IFA’s didn’t understand Adam Smith– Specialism
Technically • Do nothing or mis-sell everything– Scandals
Financially • Millfield, Berkeley Berry Birch– Loss making or bust
Regulatory • ‘Best Advice’ does not exist as a term in the FSA lexicon
– Poor understanding – Appropriate advice
Morally • 70% of Life distribution goes through IFA’s– Soft commissions
In 2006 the IFA Industry was sick!
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Strategically • Thousands of unfocussed outlets– No customer segmentation
Technically • Poor physical distribution and weak store layout– Empty shelves and long queues
Financially • Small/negative margin – Limited capital for expansion
Regulatory • Luckily they didn’t have a regulator– They would have been shut down
Morally • Heavily dependent on sales overriders (bribes)
In the 80’s Food Retailing was sick!!
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Tesco – A case study
From:1980’s Pile it high and sell it cheap
To:2000’s Focus on the customer
Drive efficiencyQuality product
The No. 1 retailer in the UK
Retailing – what changed?
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Branded Manufacturer vs. Distribution
Market Capitalisation 1980
Pile it high – sell it cheap
Tesco£180m
Unilever£800m
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Manufacturer vs. Retailer
Every little helps
Market Capitalisation 2011
Unilever£26,000m
Tesco£30,000m
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To be the leading Wealth Adviser in the UK
Independent, holistic financial planning supported by discretionary investment management
Manifesto - 19th June 2007:Fees not CommissionEducation not Ignorance Integrity not StealthHolistic not LimitedIndependent not Tied
The Towry Approach
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Building Blocks I
• Market opportunity• Regulatory pressure RDR + TCF + PBR• Darwinian drive• Corporate transactions
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Building Blocks II
• Culture and values– Team approach– Consultation– Decision making
• Core values– Honesty and integrity– Focus– Excellence– Teamwork– + 1
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Communicating the Message I
• To our clients– Statements– Calling direct– Client letters– Comfort seminars– COI seminars– Industry seminars– Press ‘thought pieces’
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Communicating the Message II
• To our people– Roadshows– Presentations– Intranet– Shareholders conference– Induction programme– Masters programme– TCC– Staff survey– ‘Ask Andrew’
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Set backs and road blocks
• Industry resistance• Redundancy programme• Economic climate• EJ publicity
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Results so far – AUM growth
2006 2007 2008 2009 20100.0
1.0
2.0
3.0
4.0
5.0
Closing AUM (£bn)
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EBITDA growth
2005 2006 2007 2008 2009 20100.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
£m
Breakeven
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Financial Conclusions
• What if there’s no crisis?– Invent one
• Apply the 80:20 rule• Don’t forget to pay the bills• Remember why you’re in the swamp• Give people ownership
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Practical Conclusions
• A thousand small steps– Unless you’re crossing a gorge
• Put the fire’s out first• Build consensus
– Unless everyone else is wrong
• Publicise success– Recognise failures
• Deliver the plan
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Overall Perspective
• You cannot over communicate• Everything needs to be connected• Never let a good crisis go to waste• Celebrate success• Culture is everything
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Thank you