• A major new entrant, with large resources, great IT, and a love of the consumer could cause havoc (think Google and Facebook).
Unknown unknowns:
• The iPad is an example of a product from left field. That said, the iPhone as good as killed off the mobile phone market – as Nokia has discovered – and replaced it with the smart phone.
• How many annuity providers when carrying out their strategic planning exercises in 2013 considered the possibility of the abolition of compulsory annuitisation?
By definition, the unknown is unknown. That said, any industry that is based on IT must appreciate that advances can be both evolutionary and revolutionary.
I will be stupid, and make some forecasts:
• IT entrepreneurs will not go into boring, generally low-margin sectors such as financial services. Elon Musk, after making his millions with PayPal, started Tesla and SpaceX, not a fund business!
• Cost will be king, but brand will normally differentiate. Most start-ups will never achieve scale in time to create brand appeal.
• The basic bits such as custody, back and some middle-office will become cheap as chips and providers will be global.
• International houses will dictate pricing (which will mean both maintaining high prices in certain markets, for example, Europe, and agreeing cheap mandates elsewhere).
• Differentiation will be at the CRM end to provide low-cost mass-market or high-price wealth management products.
• Disruption will be caused by more fixed price/hybrid propositions from platforms, asset managers and advisers.
• The surviving IFAs will need to differentiate to avoid price comparison, which means passive or braver investment selection, for example, boutiques, different asset classes.
Please do not keep this article. Change is rarely as one expects.
Clive Waller is managing director of CWC Research
