Happy sunny Friday – hope spring has sprung where you are.?
When looking at the latest news for inspiration for Eclipse commentary I’ve found myself focusing less on the news specific to financial services (sorry Consumer Duty, I’ve had my fill for a while) and more on the wider business news, to consider how it might impact on our businesses as well as, ultimately, the sector overall.
There are a few big things swirling around right now:
- The employment market. I don’t know about you but I’m getting whiplash at how quickly things are changing in this. The dynamics between those employing and those looking for jobs. The expectations around flexible and/or home working. The rapid change in inflation-related expectations.?Natalie Bell?(who is much more attuned to this stuff than me) made the point that we’re all responding so quickly to external pressures/ideas/trends/perceived trends. And it’s not just within our own sector. Or our own country even. Thanks to the social, connected way of working, we found ourselves debating recently some legislative changes in Sweden and whether that should influence some of our internal policies?!
- This of course is just a reflection of what a small place the globe is in this hyper-connected, internet-driven world. And there are many benefits to that; to broadening our own horizons, thoughts and ideas (whether on employment or business ideas or personal endeavours). However, it’s also limitless and, at some stage, we all as business owners and individuals need to draw some markers around what we do, and how we do it and then stay focused on that.
- There are also huge global storm clouds brewing with regard to capital raising; whether debt or equity. This, again, applies to all industries, not just finance, but as a sector that has been heavily impacted and shaped by the ready flow of cash over the last few years, this tightening is inevitably going to have consequences if it continues and, we’re talking relatively significant consequences as these aren’t small businesses that were being fuelled. It’s often the case that a ready flow of cash masks underlying issues and when that is no longer available, the issues can cause an unravelling at a startlingly fast rate.
- That cashflow issue is also applying quite intensively to technology firms; many tech founders I’ve spoken to recently have been very open about the fact they knew they had been fortunate enough to raise funds at a high multiple and that they wouldn’t get the same level now. Which is fine, until the next round approaches. And, as you can see in the article below, bringing it back to finance, Fintech funding has dropped faster than any other section in Q1. This is quite worrying as, I know from my own experience, tech is not quick or cheap to build fast if you want to do it properly. And we’re all conscious that finance needs a big leap forward in terms of tech if it is to be dragged into the modern era. And this funding being pulled when we’re potentially on the cusp of a lot of advancement could really set us back.
So – Cathi – that’s all a bit depressing, and it’s a nice, bright day, give us a cheery conclusion to end on… um, at least it’s not just us suffering all these challenges, it’s the whole world and, you know, misery loves company. Will that do?
In all seriousness, I guess I’m pointing out the obvious issues facing us all and I think for financial planning firms, the key takeaways are:
- Spending some time getting really specific on what you do, who you do it for, what type of employer you are and what your overall why is. Reminder: you can’t be everything to everyone, so you need to really hone in on your own business personality and proposition.
- Due diligence should always mean due diligence (not just a quick bit of research), but this is the case now more than ever. Your platforms and investment proposition, no matter how solid they may seem on a surface level, now might be the time to peer under the bonnet a bit more. What’s their funding structure? Do they have another round coming up? Is there the potential for things to go pear-shaped very quickly and, if so, what’s your contingency plan for your clients?
- Ditto with technology. We know moving from one piece of tech to another can be a laborious process. Imagine doing that and then the new home for your client data implodes a short time later. Again, dig under the headlines; what’s their roadmap? What stability can they offer you and your clients? Shiny stuff is a great distraction for all of us, but very often, slow and steady wins the race.
At our recent roundtable in Edinburgh, Adrian Murphy made the statement that when it comes to regulated financial services, what we mostly do is often considered boring but that, in business and client’s personal finances, boring is very often exactly what is needed.
Wine; I think we’ll get a bit cheeky with a dessert wine. A sauternes in particular. Our podcast producer once said to me “if I had a newsletter, I’d be?recommending this wine”. And now I feel like his fairy godmother, bringing his newsletter dreams to life.
?Have a wonderful weekend all.
