It’s that time of year again. No, not Christmas.

‘Tis the season to be confronted by the end of year performance appraisal. A time for honesty with each other and quiet reflection on how 2014 panned out as we rush headlong into the festive season.

Carl and I thought we would share with you the parry and thrust of our internal performance appraisal – without fear or favour. Warts and all!

Of course, you can’t have an appraisal without KPIs. So, we went back to earlier Fortissimo blogs and calibrated against what we said was likely to shape the industry in 2014.

Our big, bold predictions? The benchmarks by which we frame strategic advice to our valued clients and against which we judge M&A activity when acting for both buyers and sellers.

Our call was the relentless rise and influence of the D-Words:

  • Democratisation of content
  • Digitalisation of delivery
  • Disintermediation of the value chain, and
  • Disaggregation – aligned advisers leaving institutions.

So, how’d we go against the D-words. Let’s start with the bottom one, Disaggregation, and work our way up.


Tony & Carl’s Totally Awesome Performance Appraisal Scorecard

KPI: Disaggregation

The possibility that the current high levels of market concentration and institutional ownership pf advice will reduce over time as aligned advisers leave to establish new ventures

  • Ray Myles bought back ANZ’s stake in Fortnum
  • AMP announced it was closing out Genesys (or Genesys announced it was closing out AMP) – whichever way you look at it, disaggregation is in there somewhere
  • Paul Barrett’s Next Gen was announced, quickly followed by Steve Tucker’s Koda
  • Bank executives talked of “ROE” on advice divisions and the rationale for owning aligned channels (or not as the case may be)

Overall:  A lot has already happened.  Divestments and more breakaways to come?

KPI: Disintermediation

  • SMSF growth continued apace, many of which are non-advised or have multiple advisers and who come and go
  • MFunds are a sign of disintermediation – AMP participating in MFunds might just be a turning point
  • The arrival hall at Mascot International Airport was well frequented by overseas players armed with “robo-advice” tools and direct to client engagement models, but so far not a lot has happened
  • The likes of Coles stepped into financial services.  This is a form of disintermediation for the incumbents and a major threat to member based funds and the banks looking to retain clients and up-sell via “scaled advice” channels
  • Local B2C models started, spluttered and some have soldiered on – some have even won international awards

Overall:  We figure disintermediation may be over-estimated in the short term but under-estimated in the long term

KPI: Digitalisation of delivery

  • On-line broking is now totally mainstream
  • SocietyOne and the whole P2P “space” hit town, also evidencing the connection between disintermediation and digitalisation
  • The banks significantly ramped up their digital delivery strategies in 2014, particularly phone and tablet based
  • Services were launched to assist with digitalisation of the delivery of investment and super product solutions for both member based organisations and other disturbers (eg FNZ and BrightDay)
  • A number of specialist digital strategy advice businesses mushroomed to serve the advice space (eg Colin William’s “Humble Investor”)

Overall:  Digitalisation and disintermediation go hand-in-hand and we see more variations on these themes occurring in 2015, as well as the more traditional channels embracing digital strategies to lower costs and to better engage with clients

KPI: Democratisation of content

  • Free general financial advice and content is freely available everywhere – like medicine, the web offers “help yourself” content at the click of a mouse
  • Even the tabloids run money sections – it’s a veritable tsunami of financial services content

Overall:  No respite in terms of content – the challenge will be how to monetise that content.  The recent tie-up between Eureka and One-Vue is arguably seminal

Carl will always be a harder marker.  But all up, and after much gnashing of teeth and arm wrestling, for our appraisal, we gave ourselves a pat on the back and adjourned to Panzerotti Café & Bar for a well-earned, Christmas thirst quencher.  And at this point we coined a new D-word, one that snuck up on us in 2014 and may well be a “game-changer” – “D” for Distraction as the scandals in the industry, the FoFA fiasco and the factional fighting may well continue to distract consumers and wealth management participants alike, forcing the participants once and for all, to embrace new or improved models that better serve clients and are seen as high value propositions.

Bring on 2015!  To all our friends, clients, followers and fellow Fortissimo believers, have a wonderful and safe festive season and we will see you next year.

Warm regards.

Tony & Carl