No Small Change

CHAPTER 7Cutting in the Middle Man

You can't make much sense of the UK retail financial services market and the changing role of marketing in it, past, present or future, without considering the role of intermediaries – and, specifically, intermediaries giving one sort or another of financial advice.

Over the years, intermediaries like these have played a central role in most sectors of the market, the only major exception being retail banking.¹ And as a result, the defining relationship at the heart of most of personal finance has been a triangle, in which the three corners are represented by manufacturers, intermediaries and consumers.

Those with any knowledge of game theory will react with immediate suspicion to any sign of a triangular relationship. A key principle is that in any game where three parties are involved, two will usually gang up on the third. And in a market where consumers don't have much power or authority, and where costs and charges have historically been opaque, many won't hesitate to take a view about who'll be doing the ganging up – and on whom.

We'll come to that. But let's start with three general points about the intermediated shape of the market.

1. In principle, there's nothing very unusual about it. You could say exactly the same about the way that most other sectors of the consumer economy are organised, except that instead of the word ‘intermediary’ you'd probably use the word ‘shop’.
2. Even within the most intermediated sectors, there are, and ...