The post-RDR world and our approach
It is difficult to predict exactly how the intermediary market will evolve during 2013 as advisers get to grips with the Retail Distribution Review. Scottish Widows' head of distribution Robert Kerr believes roughly 15% of advisers will leave the market in 2013. This is down to a variety of factors.
Firstly some advisers will choose not to get the necessary qualifications. However, many may remain in the industry as introducers. Secondly some advisers will have a customer base of clients who are not willing to pay fees and thirdly those advisers who have generated income by switching clients from one provider to another will find this more challenging in the new transparent world.
Additionally the challenge of providing advice to those clients with less than £50,000 worth of assets means we are likely to see a growth in non-advised services. While these services have a part to play in the market we recommend advisers tread carefully and this will be a subject for the FSA in its early thematic review.
For many advisers the decision of whether to offer a restricted or independent proposition will continue to occupy them. While there are strong reasons to go restricted in terms of potential savings in research and compliance, advisers will need to consider if their provider or product panel provides them with sufficient flexibility to service their existing and future clients.
Additionally I remain sceptical that real savings can be generated from professional indemnity insurance as the independent sector has a superior claims history than restricted (or tied) advice. This and the continuity of service, breadth of offer and the brand of independence which our research highlights customers will pay a premium for mean we believe advisers need to consider this decision carefully.
Scottish Widows believes both markets are valid and is in a strong position to support them going forward. As well as offering advisers access to Scottish Widows' highly skilled consultant service, new flexible and transparent charging structures have also been applied across the proposition.
The scale of change Scottish Widows has introduced goes way beyond that needed for RDR compliance and shows the firm's commitment to supporting the advisory market now and in the future.
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