An outsider’s guide to ‘financial services’ Part 1 – Pensions

Over the past five months I’ve been working with an entrepreneur to help him take a business concept to a start up.  It’s not been an easy process – we’ve had several false starts – but he now has a strong concept which is due to launch in early January.  It’s been a great experience for me and it’s taken me into a business sector that I’ve not worked in before – financial services.

I must say that I was very sceptical about the values and ethics of this sector.  We’ve heard a lot over the years about mis-selling and the current financial mess and issues around banker’s bonuses had only served to re-enforce my scepticism.

But working with my client and his contacts has exposed me to a group of financial specialists with the highest ethics and values, who will never recommend or deliver a financial solution that does not place the client in a better position.

Through my work and through getting to know these contacts I’ve learnt a lot about this sector, its products and the performance of the various providers.  It’s been a bit of an eye opener for me and it’s made me change my views and outlook on my own personal finances – both in the short and long term.  Through a series of blogs I’d like to share some of my newly gained knowledge, experiences and contacts with you – but remember I’m just a naïve outsider. If you want real advice, you’ll need to ask the recognised experts.

So this is the first in the series and it’s based around pensions.
I think it’s safe to say that the majority of people reading this blog with have a personal pension or a frozen pension from a previous supplier.  These will be being provided by a recognised name and we probably don’t question the returns we are getting on our investments – after all, it’s with a reputable provider.

But I was shocked to learn of the difference in performance between the ‘best’ and the ‘worst’!

• Over a five year period the best personal pensions averaged a 37% growth rate before charges (source: Money Management)
• Over the same period the worst personal pensions averaged a -6% growth rate before charges (source: Money Management)

In mathematical terms this means that if you had a fund worth £10,000 5 years ago, it could be worth over £48,000 before charges – or as little as £7,500 before charges!

This information made me start asking questions! 

• What was the return I was getting on my personal pension plans? 
• Was I with the right provider?
• Was my advisor looking after my interests or had I dropped off the radar?
• Where do I go to get the right answers?

Well I was lucky.  I’d been introduced to a great pensions expert – Darrell Cable (he’s regulated by the FSA).  Chatting with him he was able to explain to me why it’s important to the review the following types of pensions on a regular basis: -

• A Personal Pension
• A frozen Personal Pension
• A With Profits Personal Pension
• A Personal Pension with a company that may be overpriced
• A Personal Pension where the provider no longer sells new pensions
• A Company Pension with an employer who has ceased trading
• A Company Pension which is being closed or changed

He then offered to undertake an independent, no obligation, free pension review.  What did this involve me in doing – sorting out the Pension Plan Account Numbers and signing a document giving Darrell authority to obtain information on my behalf.

Four weeks later, we’d switched to a higher performing provider and I never felt any pain! And he’ll review the plans performance with me annually

I’d suggest you review your pension plans without delay.  I’m happy to introduce you to Darrell Cable.  He’s a great bloke and he’ll do the same for you – an independent, no obligation, free pension review no matter what size your investment is.  Drop an email to me at neil@ifonly.uk.com and I’ll send you the form you need to fill in together with Darrell’s contact details.  Fill in the form and pop it in the post to him – he’ll manage everything else for you and keep you well informed.

Oh! and before I finish I learnt something else. If you are 50 or over you can take up to 25% of your pension as a tax free, lump sum now!  But in April 2010, the government is changing the age limit to 55!  What can you use this tax free sum for? Well the FSA have been quite critical of firms for releasing tax free cash without good reason.   Broadly speaking good reasons could include:

• If the client is perhaps facing some form of financial hardship and might be better off repaying expensive loans or credit cards.
• If the client needs capital to start a business, and there are good reasons for not wanting to get a bank loan.
• If the client is actually retiring, but feels they only need the tax-free cash now and can defer the income until later years.  (If they have other sources of income for example).

Unacceptable reasons would include:

• Accessing the tax free cash to invest in another Investment Bond or other product.
• Accessing the tax-free cash simply to hold it on deposit without any longer term objective.

Food for thought!

There is no ‘silver bullet’ that will guarantee project success – so stop looking for it.

What can we learn from the discussion I posted recently on the IoD Group on LinkedIn – ‘80% of all projects will fail to deliver the desired organisational outcome.  What steps do you take to mitigate this?’  This question was posted on 10th September 2009 and attracted comments from twelve unique contributors with a wealth of project management experience.

The conclusions I draw from these contributions and from my own experience are as follows: -

• Project success begins right at the beginning.  Before a project is initiated it is important to assess the organisational environment. 
                  o Is the climate right for change?
                  o How many other unfinished projects do we have?
                  o How successful has the implementation of previous projects been?
Answers to these questions (and many more similar ones) will provide a strong indication of the organisational climate.  If the climate is ‘hostile’, put corrective action in place first – it will cost money but much less than the costs (direct and indirect) you will incur from a failed or cancelled project.

• Define the project in terms of: -
                 o Why are we doing this?
                 o What are the objective deliverables we expect from this project
This is important.  So is the communication of these definitions to the Project Manager and his/her team.  Then give the Project Team the opportunity to question/clarify the meaning and intent of these definitions.  They will then feel more included and accountable for the project’s success.

• Setting reasonable expectations for the project is vital – what can realistically be done, by when and at what cost?  Make sure the objectives are clear and that the funding and resources needed are fully available to complete what you want on time and to specification.

• Strong Project Managers are a must! There was a strong feeling amongst the contributors that external Project Managers were more successful – they are more focussed and less likely to get tangled up in multiple projects, competing and conflicting objectives and politics.

• If internal Project Managers are used, they need to be eased into their role.  Putting them through a training course and calling them ‘Project Managers’ does not guarantee success! The use of project simulations is a great way to do this.  New Project Managers can then be assigned to manage projects that match their competencies and capabilities.

• Selecting Project Managers for their attitudes and behaviours is important.  You can put them on a training programme to improve their knowledge and skills – you are stuck with their attitudes and behaviours!

• Create high performing project teams!  Select and assign the best people – not the ones that can be spared.

• Break the project down into a series of stages or sub projects.  Monitor their deliverables against the plan and take appropriate corrective action – early! 

• Project Teams get a lot of satisfaction from achieving a goal – it’s highly motivating.  Sub projects should deliver their outcome within twelve weeks.  ‘World Peace Tasks’ rarely deliver – they take too long, produce no short term results and team members lose interest.

• Find a way of making Project Managers accountable and devise an appropriate rewards programme.  Weak accountability delivers weak outcomes.

• Once a project has started, continually monitor it against the organisation’s goals.  If these goals change and there is no longer a case for a particular project, stop it!  This is a sign of maturity.
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Thank you to everyone who contributed to my original question. You have made this blog post possible. 

If I was asked to summarise my findings into two sentences I would say: -

There is no ‘silver bullet’ that will guarantee project success so stop looking for it.
But there are a number of steps (see above) that you can take throughout the project to minimise the risk of failure!

Just because somebody pays you money doesn’t always make them your customer!

In recent months I’ve been faced more and more with the following question: -

‘We get lots of praise and great comments from our customers/clients but we are not seeing any

growth in revenues, what’s going on?’

On the face of it, we can put some of the slow growth in revenues down to the current economic climate.  But usually I find there is a more fundamental issue lurking underneath.

Let’s use one situation that has occurred recently as an example. The client operates a web based business.  Its target ‘market’ is 30/40 year old business women who like on line networking, chat rooms and women only networking lunches.  The website offers them the opportunity to: -

• promote their business
• promote their networking opportunities
• join and contribute to forums
• to offer and receive support
• to access a personal and business ‘shopping’ directory offering discounted products/services

Membership of the site is in the thousands and growing, but the take up of ‘premium membership’ for a small cost (which qualifies the individual to access a range of premium services) is low.  Premium membership was intended to be the main revenue stream for the business.  Advertising revenue on the site was to be a secondary income stream.

During a detailed conversation with the founder I took her through a business definition process I’ve developed and used for many years now.  As we went through the process (based on a series of insightful questions) the founder experienced a series of illuminations and ‘Ah-ha!’ moments.

What was the conclusion?  The website offered advertisers a route to a market of time poor but cash rich business women.  The site acted as an attractive and efficient portal for these women to access networking and support facilities that met their needs at no cost. Being time poor but cash rich, the members also valued access to a wide range of premium personal and business products and services.  Suppliers of these products and services need ‘routes to market’ to access these types of customers.

The customers where therefore the suppliers of the products and services.  The website being the provision of the route to market to the suppliers’ customer.

Suddenly the founder saw the way to generate revenue by focusing on the real customer. I’m confident that primary advertising revenues will now grow quickly and secondary income from premium membership will follow this trend.
Here’s another example that occurred about five years ago with a much larger client. Revenues in this business had peaked at £25m and had declined and ‘stuck’ at £18m.  The client made and sold a range of trade and consumer products through a network of regional and national distributors. They saw their distributors as their customers – after all, this was who they invoiced and who paid them money.

As they went through the business definition process the light came on.  The person who ‘opened the carton’ was the customer – the distributors were the route to market.  Realising this, they changed their whole marketing and sales strategy.

The result?  In 5 years sales grew to £65m and profits as a percentage of sales grew very healthily!

Have you correctly defined who your customers are?

Never define your business by what you do

A friend of mine – and he won’t mind me using his name – Bill Merry (@planesailor) worked for BT for many years.  During this period he and his wife became competent sailors, qualifying as Ocean Yacht Masters.  Bill had the opportunity to leave BT.  He grasped this opportunity with both hands and decided to start his own business.

Bill saw a gap in the training market for the provision of experiential training opportunities.  He could turn his hobby into a business and called it ‘Merry Marine’.  The business thrived – but a marine platform is not appealing all year round.  Additionally, some clients had hang-ups about marine based experiential training.  To address these issues, Bill developed and incorporated other experiential platforms into his offering.  Marine platforms still play a major part in the business offering but the company name now takes someone explaining to clients and prospects.  In fact it’s felt that enquiries may be being lost because of it.  The name of the business is now being changed to ‘Merry Experiential’.

Defining your business by what you do – at any level – is dangerous.  It can be a seriously limiting factor to the success of your business.

Suppose in the days of the Wild West, Wells Fargo had defined themselves as being in the stage coach business.  Where would they be now?  If they had defined themselves as being in the people transportation business they would have had a much better chance of survival.  But they defined themselves as being in the business of the secure transportation of money and valuables.  Carrying passengers whilst doing this gave them an additional income stream.

What does Wells Fargo do now?  It’s one of the largest retail banks in the USA.

At the time Mr Wells and Mr Fargo started their business, suppose I had founded the Acme Buggy Whip Company.  I’d have gone out of business long ago.  The whip I made was a prestige, luxury item aimed at the gentleman traveller but when buggies disappeared so did my market.  If I had defined my business as being in the luxury travel goods business, where would I be now?  Louis Vuitton eat your heart out!

Think carefully about how you define and name your business.  Consider the needs your customers have that you satisfy – this will give you a much better steer than what you do, make or sell.  It creates more opportunities to grow and diversify your business.

Would Thales Air Defence Ltd have gone through the turmoil it has since 9/11 if it had been called Thales Force Protection Ltd?  Probably not – it would have already had a more diverse product range instead of just focussing on ground to air defence missiles.

How have you defined and named your business?  How much of a straight jacket have you got it into?

Is team building any different when you are dealing with the CEO & Executive Board?

My good friend Heather Townsend (@efficiencycoach) has been commissioned to write an article for Trainingzone on team building with the top team. She posted a question via various social media applications inviting ‘real world’ perspective on the following questions:

1) In your opinion is team building any different when you are dealing with the CEO & executive board?

2) When about to work with a top team, are their different rules of engagement to less senior teams?

3) should leadership be implicitly (or explicitly) woven into any team building with top teams?

Based on my experiences of working with top teams in multinationals to small family run businesses, here are my thoughts: -

• What is team building all about?  It’s about building mutual trust and respect.
• Does this apply at any level in an organisation?  Yes it does.
• Do you need more of it at the top level?  Probably not, but it’s built around different things.

At the top, mutual trust and respect needs to be built around the overall strategic direction of the organisation.  The executive team needs to coalesce around a common vision for the future of the organisation.  They need to recognise and accept that they cannot deliver the vision without each other.  And because there are fewer people at the top the impact of a ‘loner’ is far more serious.

They have to learn to harness the conflict inherent in their differing management and recognise that only by working together can they be a perfect team – but this requires high levels of mutual trust and respect.

Do you have to put them through a ‘team building experience’ to achieve this?  It depends on your offering.  Personally, I haven’t used a specific team building experience with a senior team for over 10 years – but I wouldn’t right of the value of them.  It depends on the team and what they done and experienced before.  Instead, I encompass team building into the work that I do to great effect.  We start to build the team around a common vision for the future, getting them to define and agree three things: -

• what will we be achieving?
• what will we be doing?
• what will we be like?

and it continues on from there when we look at Structure, Strategy, Control Systems and Rewards.

In the work we do, we never decide anything by a vote – agreement is reached by consensus. But the final decision is down to the person in whose bailiwick the responsibility lies and who ultimately will be held accountable.  They listen to what the others say/recommend and they decide.  If they chose, they can ignore everyone and make up their own mind or take the council of their team.

So I think there are different rules of engagement with the top team.  It has to be based around the difficult strategic issues they are trying to grapple with.  The conflict within the team can be very intense, and you have to have some robust tools, processes and methodologies to handle and harness this.  The inherent conflict should never be suppressed – you’ll just end up with top team ‘coffee mornings’.  Neither should it be left to get out of control – you’ll most definitely have blood up the walls and all over the carpet!  Conflict, if harnessed in an environment of mutual trust and respect generates creativity and that’s what creates the step changes in attitudes, behaviours and performance that the top team are looking for in their people, their teams and their organisation.

Should leadership be woven into this? Yes, through the use of experiential learning and probably in a covert way.

Please feel free to add your comments to this blog and I’ll pass them on to Heather to add to her research.
When Heather publishes her article I’ll update this blog with the relevant link.

Why are people reluctant to contribute to on-line discussions and forums?

I personally don’t believe this is because of a lack of time.  I believe it’s because they fear that others will scoff or laugh at their comments.  They feel that the knowledge, experience or perspectives that they can offer are so well known within their peer group they are not worth contributing.

Let me share my experience.
 
Firstly, I get to work with lots of different organisations.  Public sector and private sector.  Start-ups through to blue chips.  I use the same tools, techniques and processes to help them deliver sustainable exceptional performance.

What surprises me though in my work is that no matter what the size of the organisation, or the level of competence/experience/education of the management team members, many of the simple (but effective!) tools I use come as completely new things to them.

Many of the group members are well educated graduates and MBAs – but they have never seen or heard of the tools and technique I use (and they are not rocket science!)

Secondly, I was a reluctant blogger and contributor to on-line discussions and forums.  But having overcome the fear that what I can offer is so well known within my peer group that they it’s not worth contributing, I’ve got involved.  And have received some great feedback on my contributions.

So don’t assume that the knowledge, experience and perspectives you offer are common knowledge.  Your contribution could prove to be the answer to your fellow group member’s problem.

Or am I barking up the wrong tree?

easyJet – a great example of the proactive use of Twitter

In a tweet I made yesterday, I made a passing reference to easyJet.  I mentioned to a twitter friend that I was going to Belfast on Friday on Ryanair but would have preferred to use easyJet but the times of the flights didn’t work out.  Within 30 minutes I had a tweet back from@ easyJetCare thanking me for my loyalty and hoping I’d be flying with them again soon.

Here’s a great example of an organisation using social media to monitor and manage its reputation in this fast moving environment.  Checking back through their tweet stream you could see that they were picking up both good and bad tweets about their business. They were proactively working with customers to mange any issues they had.  They were resolving issues in real time.

So if you fly easyJet and have a problem just send a twitter mentioning their name and you’ll get a real person on the case without delay!

Start thinking differently if you want to sell your business for the maximum price?

Using the traditional method to sell a company involves shockingly low levels of marketing activity and is quite simply the wrong way to go about selling a business.

Business owners know that in order to sell a product or service, an active marketing programme will always produce the best results and the best price.

So when a client has decided to sell their business and the business has been prepared for this event, we introduce them to BCMS Corporate.  They approach the whole challenge of selling a business in a completely different way.

Here’s seven FREE tools to help you start thinking differently about selling your business: -

•  a free copy of the book ‘Selling your business for maximum value’
•  free place on a seminar near you to find out why BCMS Corporate’s  approach to selling your business is so refreshingly different.
• Ten Things Every Entrepreneur Should Know Before Trying To Sell Their Business
• You need to start thinking differently in order to sell your business for maximum value – Part 1 Avoid passivity at all costs
• You need to start thinking differently in order to sell your business for maximum value – Part 2 Motives v Multiples
• You need to start thinking differently in order to sell your business for maximum value – Part 3 Bidder Competition
• You need to start thinking differently in order to sell your business for maximum value – Part 4 Future Potential

The most productive meetings are usually those with the fewest number of people attending. Or are they?

@efficiency coach, a great twitter buddy of mine tweeted the above statement  the other day (I added the question at the end).  It stopped me in my tracks and made me think.  I sent a tweet back asking how she was measuring ‘productive’ – by the number of outputs or the quality of the outputs?   A tweet came back to say that quality was always paramount.

So this set me thinking again.  My thinking on management is strongly influenced by the work of Ichak Adizes.  He defines four roles that must be performed if an organisation is the be effective and efficient in both the short and long run (see A SIMPLE CONCEPT).  These roles are performed by people,  but no one person can excel at all four roles – most of us only excel at one maybe two roles (perfect managers only exist in text books!).  Each of these roles comes with its own set of behaviours – mismanagement styles (and we are all mismanagers!)

To get a quality decision therefore you need to ensure that all four PAEI perspectives are represented and are allowed to express their views and opinions.

So how does this impact on meetings?  Well let’s call a meeting of people who share a common PAEI profile.  They all share the same view, arrive at decisions quickly and consequently have a very productive meeting.  But did they make a quality decision?  Probably not.

Let’s now call another meeting and this time involve people with different PAEI profiles – but at the extremes .  Will their meeting be productive?  Probably not, lots of debate and argument.  But if they could make a decision it would be a quality one!

So where’s the solution?  You need to understand the PAEI profiles of the people in your organisation.  I have a simple tool you can use – just drop me an email.

When you call a meeting you need to ensure that all of the PAEI perspectives are represented.  This will inherently generate conflict so the meeting should have an ‘external’ facilitator – someone who is not directly involved in the outcome.

So how many people do you need to have a productive meeting?  As many people as it takes to cover all four PAEI perspectives +1 – the facilitator who ensures that all voices are heard.

How to ensure your projects do not fail!

Yesterday’s blog identified the Eight Causes Of Project Failure.  If you don’t want you project to simply become one of the statistics, start answering the following questions.  If any of the answers to the questions are unsatisfactory, you seriously need to take corrective action immediately!

(No apologies for the length of this blog – these questions are important!)

‘
1. Lack of clear link between the project and the organisation’s key strategic priorities, including agreed measures of success.

• Do we know how the priority of this project compares and aligns with our other delivery and operational activities?
• Have we defined the critical success factors (CSFs) for the project?
• Have the CSFs been agreed with suppliers and key stakeholders?
•  Do we have a clear project plan that covers the full period of the planned delivery and all business change required, and indicates the means of benefits realisation?
• Is the project founded upon realistic timescales, taking account of statutory lead times, and showing critical dependencies such that any delays can be handled?
• Are the lessons learnt from relevant projects being applied?
• Has an analysis been undertaken of the effects of any slippage in time, cost, scope or quality?  In the event of a problem/conflict at least one must be sacrificed.

2. Lack of clear senior management ownership and leadership.

• Does the project management team have a clear view of the interdependencies between projects, the benefits, and the criteria against which success will be judged?
• If the project traverses organisational boundaries, are there clear governance arrangements to ensure sustainable alignment with the business objectives of all organisations involved?
• Are all proposed commitments and announcements first checked for delivery implications?
• Are decisions taken early, decisively, and adhered to, in order to facilitate successful delivery?
• Does the project have the necessary approval to proceed from its nominated Director either directly or through delegated authority to a designated Line Manger?
• Does the Line Manager have the ability, responsibility and authority to ensure that the business change and business benefits are delivered?
• Does the Line Manager have a suitable track record of delivery?  Where necessary, is this being optimised through training?

3. Lack of effective engagement with stakeholders.

• Have we identified the right stakeholders?
• In so doing, have we as intelligent customers, identified the rationale for doing so (e.g. the why, the what, the who, the where, the when and the how)?
• Have we secured a common understanding and agreement of stakeholder requirements?
• Does the business case take account of the views of all stakeholders including users?
• Do we understand how we will manage stakeholders e.g. ensure buy-in, overcome resistance to change, allocate risk to the party best able to manage it?
• Has sufficient account been taken of the subsisting organisational culture?
• Whilst ensuring that there is clear accountability, how can we resolve any conflicting priorities?

4. Lack of skills and proven approach to project management and risk management.

• Is there a skilled and experienced project team with clearly defined roles and responsibilities?  If not, is there access to expertise, which can benefit those fulfilling the requisite roles?
• Are the major risks identified, weighted and treated by the Line Manager, the Director, and Project Manager and/or project team?
• Has sufficient resourcing, financial and otherwise, been allocated to the project, including an allowance for risk?
• Do we have adequate approaches for estimating, monitoring and controlling the total expenditure on projects?
• Do we have effective systems for measuring and tracking the realisation of benefits in the business case?  Are the governance arrangements robust enough to ensure that “bad news” is not filtered out of progress reports to senior managers?
• If external consultants are used, are they accountable and committed to help ensure successful and timely delivery?

5. Too little attention to breaking development and implementation into manageable steps.

• Has the approach been tested to ensure it is not ‘big-bang’ for example in IT-enabled projects?
• Has sufficient time been built in to allow for planning applications in Property & Construction projects for example?
• Have we done our best to keep delivery timescales short so that change during development is avoided?  Have enough review points been built in so that the project can be stopped, if changing circumstances mean that the business benefits are no longer achievable or no longer represent value for money?
• Is there a business continuity plan in the event of the project delivering late or failing to deliver at all?

6. Evaluation of proposals driven by initial price rather than long-term value for money (especially securing delivery of business benefits).

• Is the evaluation based on whole-life value for money, taking account of capital, maintenance and service costs?
• Do we have a proposed evaluation approach that allows us to balance financial factors against quality and security of delivery?
• Does the evaluation approach take account of business criticality and affordability?
• Is the evaluation approach business driven?

7. Lack of understanding of and contact with the supply industry at senior levels in the organisation.

• Have we tested that the supply industry understands our approach and agrees that it is achievable?
• Have we asked suppliers to state any assumptions they are making against their proposals?
• Have we checked that the project will attract sufficient competitive interest?
• Are senior management sufficiently engaged with the industry to be able assess supply-side risks?
• Do we have a clear strategy for engaging with the industry or are we making sourcing decisions on a piecemeal basis?
• Are the processes in place to ensure that all parties have a clear understanding of their roles and responsibilities, and a shared understanding of desired outcomes, key terms and deadlines?
• Do we understand the dynamics of industry to determine whether our acquisition requirements can be met given potentially competing pressures in other sectors of the economy?

8. Lack of effective project team integration between clients, the supplier team and the supply chain.

• Has a market evaluation been undertaken to test market responsiveness to the requirements being sought?
• Are the procurement routes that allow integration of the project team being used?
• Is there early supplier involvement to help determine and validate what outputs and outcomes are sought for the project?
• Has a shared risk register been established?
• Have arrangements for sharing efficiency gains throughout the supply team been established?

 Related Article:  Eight Causes of Project Failure

 

Source: NAO/OGC list of common causes of project failure