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A friend of mine recently booked a celebrity for an event in London. The speaker was at the event for about 2 hours, and spoke for 45 minutes. They are, I’d suggest, a ‘B’ list celebrity. You’ve probably heard of them, although my Mum wouldn’t have.
And the cost for this individual? An eye watering (not to mention knee trembling) £10,000. Other performers are able to charge 5 times that amount.
I’m rather torn between two reactions. On the one hand, I’m quite happy to accept that it is not the hourly rate that matters when you are dealing with talent. If you have worked hard for many years to develop your knowledge or skill set, you should be rewarded, that’s fair enough.
But £10,000 for 2 hours? Can that really be justified? It seems the market has adopted a pricing policy of ‘set the price to a point where the customer will just laugh at you then reduce it by 5%’.
One can safely assume that there is no regulatory pressure on fees in the entertainment business. It’s free market economics, albeit with a highly limited supply. In financial services, we have all sorts of people telling us what is and isn’t a fair price. The main reason for that situation is because of collusion between providers and brokers in setting commission levels that began many years ago and which created a very imperfect market. This led to Government intervention.
I think it’s fair to say that after dinner speakers don’t compete on price. If you are trying to choose between Michael MacIntyre or Ranulph Fiennes for your industry conference closing dinner, price is unlikely to be the major factor.
When a client decides between two advisers that they have met, they choose the one they feel they get on with, the one they feel they might be able to trust. Trust in their knowledge, trust in their experience, trust in their expertise (which is very different from knowledge, a point the CII would do well to understand).
For the client, it is the service proposition that matters, not the method of payment. How we work with a client, what approach we take, the questions we ask. Not one single client has asked me whether Ovation is independent or restricted, or responded to a blog I wrote on the subject which was emailed to them all.
Regulators should be the consumer’s champion. This means they need to understand what consumers want. I’d like the FSA to work with IFAs more. Be a little less ‘Big Brother’, a little more ‘older sister’. There should be more dialogue between the FSA and advisers about what is actually going on, the view from the shop floor. Let’s go an have a beer together. We can help them understand that it is time to move on from focussing on charges, point them in the direction of poor practice (we’re the ones best placed to see it, after all), and talk to them about what consumers want so that they can frame regulation accordingly.
So that in the future, when a potential client seeks a financial adviser, they will be making a judgement based upon a set of requirements that are going to ensure their adviser is best suited to them, as opposed to a list of ‘things to watch out for when choosing your financial adviser’.