I read somewhere recently:
Products are rapidly evolving into services, these are more connected to customers ecosystems and provide holistic experiences that are meaningful beyond the product/touchpoint. Creating products that live in isolation are progressively disappearing, and one may say that “There are no products, only services”
Whether it is these words or others to the same effect, what I read into the key message is that increasingly things that are being sold and marketed is more about how it is received rather than what it is. Experience and hence value is in the eye of the customer not the creator, and hence regulation is likely to have to follow this also.
Now lets consider what this could mean in wealth management and investments….
What it may mean is that the ‘value’ in an investment product or service is now being more assessed on the end customer experience and how they feel about it rather than just the brand, design or name of it. This has interesting connotations when it comes down to ‘best interest’ testing also as best interest is now very much in the eye of the consumer, and many would suggest hard to prescribe a process for doing such that doesn’t involve the consumer themselves, after all most of us are different from each other..
What it may mean is that investment products and services that are transparent and have more ongoing commentary around what is going on within them are likely going to be considerably more appealing than ones that are not for the segment of the market that wants content in their overall experience.
What it may mean is that investment products and services that adjust around a consumer’s specific desires or desired experience are likely to be a lot more palatable than ones that are not.
The implications of this is that when designing an investment product or services moving forward there is going to be a lot more focus on the individual investor’s needs and wants, and overall experience, into the overall design, rather than a ‘one size fits all’. I would suggest that the days of high margin investment products where the customer experience is a valuation update are going to be somewhat challenged. The big question is then can, and if so how, can an enhanced consumer experience happen inside a product structure ? or really is by definition the notion of a product structure actually diluting the consumer experience ? Clearly this is good for those who may not want content and transparency, but perhaps not for the increasing number of people who do.
My sense is that we are going to see a new era of regulatory structures where the line between product and service starts to get a lot more blurred than previously. We may see both the definition and regulation of products and services converge over time, and what will likely differentiate them is the attractiveness, plausibility and credibility of how they arrived at that point from a consumer perspective. For many product providers it may be too late and somewhat unsavoury to move from their current operating and proposition model to something new. For many service providers it may take some time to get the industrialisation efficiencies right. However as the industry moves on, for those who can provide client centric services with productised efficiency this is likely to be the new nirvana in attracting and retaining valuable customer monies.