Innovation is no longer a luxury for financial advice firms – it’s a strategic necessity. Katie Brinsden (pictured), Managing Director at the national, directly-authorised IFA, Truly Independent, outlines eight compelling reasons why embracing change is vital for firms’ growth, competitiveness and long-term resilience – and explains how innovation can actually make advisers’ lives easier.
The academic literature on innovation is extensive, to say the least. In fact, it might be described as monumental. Much of it is rather dull, not to mention bogged down in the painfully obvious.
That said, it is certainly home to a few useful bits and bobs that are worth seeking out. For example, the adviser community might be especially interested in the internal and external imperatives for innovation.
These provide a handy snapshot of why it makes sense to move with the times. Importantly, they also go a long towards explaining why those who refuse to do so could be the architects of their own demise.
Below is a brief selection. You may be surprised – pleasantly or otherwise – by how strongly it reflects our collective cause in the face of challenges such as the advice gap, overservicing, regulatory pressure and near-relentless technological advances.
Reasons 1-4: internal imperatives
- Innovation for growth: The success of most new or rapidly expanding companies is usually rooted in some sort of novel proposition. Growth is fuelled by unique selling points and/or state-of-the-art products.
- Innovation as a consequence of growth: As a business expands, carrying on as before might become impossible. Those same new or rapidly expanding companies often need a “second act”.
- Innovation to maintain or enhance competitive advantage: Forward-thinking organisations work to remain ahead of the game. Needless to say, they cannot stay at the forefront merely by standing still.
- Innovation to mitigate “fade”: Relatedly, companies that rest on their laurels invite diminishing returns. As the impact of what first made them successful dwindles, they must innovate simply to keep pace.
Reasons 5-8: External imperatives
- Competition: Complacency is seldom an attractive attribute, even at the best of times. In a crowded marketplace, particularly against a challenging backdrop, it can prove disastrous – if not terminal.
- New technology, regulation or markets: Innovation is not always a case of trying to surge ahead of the pack. Sometimes it is a case of adjusting to change – and, as such, a case of the survival of the fittest.
- Booms and busts: Surprise shifts in the economic cycle demand a response from businesses of every type. Resilience, adaptability or agility – or a combination of all three – could be the order of the day.
- International factors: To an extent, the far-reaching ramifications of world events are felt by all companies. The triggers might include wars, natural disasters and – as we all now know only too well – pandemics.
Planning, flexibility and an easier life
In my opinion, every one of the internal imperatives outlined above should strike a chord with advisers. We would all like to grow. We would all like to be ready for the corollaries of success. We would all like to cultivate an edge. We would all like to avoid falling behind over time.
Similarly, each of the external imperatives ought to ring true. We would all like to see off our competitors. We would all like to embrace the opportunities presented by breakthroughs beyond our control. We would all like to prosper throughout the economic cycle. We would all like to be able to cope with whatever the wider world throws at us.
It is therefore first useful to recognise the difference between internal imperatives and their external counterparts. Basically, the former are largely predictable, whereas the latter, by their very nature, are much tougher to foresee.
This distinction has implications for overall strategy. We can plan for internal imperatives as part of normal business practice, but we also need to be sufficiently flexible to cope with the unexpected.
But here is the big question: why are so many advisers still reluctant to factor innovation into their thinking? The imperatives detailed here – and there are many more that could have been added to the rundown – should make plain that moving with the times is nothing less than a necessity.
Crucially, innovation is also a means of making life easier for all concerned. By way of illustration, consider the three service propositions we have developed at Truly Independent.
The first is completely digital. The second is virtual. The third is active, meaning advisers still conduct client meetings in person.
These approaches allow us to meet the needs of all our clients, irrespective of their wealth level. In tandem, they help take care of the resource-intensive “heavy lifting” that has left too many advisers overburdened, overworked and overstressed.
I would urge every adviser to revisit the above list at regular intervals. If even one of these imperatives resonates then it should be taken as a sign that some kind evolution – if not full-blown revolution – is urgently required.
