I’m slightly delayed in writing this blog looking ahead to 2022, I was supposed to write this in December. However, when it came to put pen to paper, it felt like there was too much uncertainty. As the news and weather turned increasingly bleak, with talks of another Christmas cancelled and another January lockdown, any look ahead to 2022 would just be a repeat from 2021.
Sitting here in the second week of January, not perhaps the time of year most associated with optimism, there appears to be a real possibility of 2022 being the end of the pandemic, with even the WHO considering this a possibility. It must be said that there will still be difficult weeks ahead for many, and the end of the pandemic at this point simply means Covid moving to endemic status, considering where we have been for the last 2 years, this must be cautiously celebrated.
One thing it also does it offer the glimpse of some more certainty on the horizon, which for businesses, who have for so long needed to consider several different scenarios, is a welcome sight. So, what lies ahead for us in 2022, in particular, within wealth?
I’m sure that many will have their eyes on the introduction of the Operational Resilience rules in March. Hopefully this proves like a timely implementation date, as the point at which work from home orders are lifted and firms can make long term decisions about what model they want to embed, what workarounds that have been put in place for the last 2 years should remain, and which should be transitioned back to either the original process, or something new. It also comes at a point where these questions of operational resilience are very real, and potentially very different to what firms were planning for before Covid. Firms will have learnt a lot about themselves in the last couple of years, and the embedding of these new rules will allow for these lessons to be learnt from. One thing that both firms and the regulator need to remember is that memories of such disruption can be short-lived, and the next crisis is likely to come from a very different direction, and cause a whole new set of issues, perhaps one of the most important things we have learnt is that the risk isn’t always the one that you can see.
New Market Entrants
Beyond Covid then, what else are we looking at in the next year. I think one thing that is very welcome are the new products that have been announced in the last couple of months of 2021. Products such as Dodl from AJ Bell all geared towards answering specific problems that have been bubbling away but are now becoming mainstream. The main ones from my perspective as 1. The advice gap; 2. Inter-generational Wealth Transfer; 3. ESG and the response from the wealth industry to the climate crisis. We are now seeing real solutions being offered to these problems, in terms of products being aimed at a new digital savvy customer base, or at a lower cost which offers hybrid advice models, or investments readily available which provide consumers with choices aligned to their objectives in investing. I think there is also recognition of the impact that investments can make in facilitating our transition away from harmful environmental practices and ways of doing business.
There is undoubtedly more work to be done in each of these aspects, we are still in a position where a large proportion of the population want, but are unable to access, advice. We still need to do more to ensure that investment choices are made with sufficient information available to consumers, and we also need to acknowledge the scale of the movement of assets between generations in the coming years, but it feels like a tipping point has been made that allows for some of the problems to be addressed. The wealth management industry is very often characterised as inherently inert, but this isn’t the case, where innovation occurs, the change can be rapid. It may be that the external forces which are going to cause this innovation are becoming too strong to ignore.
And what then will be the next driving force for large scale change projects for 2022. I think the most obvious answer is looking at the M&A activity that has happened over the last year. This activity must lead to some sort of integration between business lines, whether horizontally, or in a lot of cases, vertically. We may expect to see some more activity in terms of migrations between platforms in the coming year, certainly the acquisition of Nucleus by James Hay and the future move to the FNZ platform suggests so. If we are to see another round of re-platforming and / or migrations, then as an industry we need to have an open conversation about how we avoid the challenges and issues seen in the past, with huge delays and costs on some parties within a project, and most importantly, without the lack of clarity, the disruption to service, and the harm presented on customers. I do hope that when those large scale changes which have been put on the shelf come back on the agenda that consideration is given to how things can be done better. I think the last 2 years have highlighted some real success stories for how change can be done, unfortunately those programmes from pre-Covid times that are still be worked through seem like relics from another time. It would be a shame if we just reverted back to Business As Usual.
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