In the latest of our adviser interviews Helen Morrissey talks to Essential Financial Advisers' Ian Highton about how the firm is preparing for RDR
How are you preparing for RDR?
We have spent a lot of time thinking about our service proposition over the last twelve months. We need to be very clear with clients about how our charging structure works, and the fact they have an option on how they pay for our service. I think this approach is very clear cut as the client will know exactly how much they are paying for the work we do, whether it be an initial meeting or an ongoing service.
Essentially we are already running as a fee charging practice as we did not see the point in waiting until the end of 2012 if we were able to do it now. But we have an education process to go through with our clients to ensure they know how things are going to work. With our new clients it tends to be less of an issue but we still have work to do with our existing clients to explain how the process will work.
What has been the most difficult part of preparing for RDR?
The exams have been a challenge. As well as communicating the changes to our existing clients.
We have done a segmentation process of our client base to establish who we have not spoken to for a while so we can contact them and let them know what is going on. I think it is more difficult to talk about the changes with existing clients but we have to give them the opportunity to understand what they get from us and to decide how they want to proceed.
However, we have to realise that there will be some clients who will not want to pay fees and we will need to make decisions on how to move forward.
How prepared do you feel the industry as a whole is for RDR?
I have been attending a series of best practice meetings so I get the chance to speak to other advisers about how they are approaching RDR. You tend to find they fall into two groups – some are addressing the issue now, they have segmented their client base and decided how things are going to change. However, I feel some of the smaller firms are struggling to progress with these changes in addition to doing their day job. Others are worried that their clients won’t accept a new fee paying structure. However, there is an education process to be gone through here so clients understand what they are getting from their fees.
One thing for sure is that advisers need to make the time to make these changes happen and if that means doing it in your spare time, then so be it. No one can just sit back and wait for things to happen.
What impact do you feel RDR will have on the industry as a whole?
I think it will improve the professionalism of our industry, though I can’t help but feel a bit sad that we will also see some good advisers deciding to leave the industry as a result of the exam requirements. While some advisers will undoubtedly leave the industry for all the right reasons there will be some who just don’t feel the exam culture works for them. These advisers may well have the right knowledge but if they haven’t taken an exam for some time then they might not necessarily have the technique to do the exam.
Are there any key areas where you feel advisers need more support?
I think it is really important to develop a support network among your peers – you have to talk to other firms and ask them how they are approaching the various issues. It is not a case of getting people to disclose commercially sensitive information, it is about talking about the challenges that have been faced and how they have been dealt with.
It is a really interesting dynamic being able to talk to like minded people and it could be about anything from IT to terms of business. One thing we realised that came out of these discussions was that we needed to develop more marketing material for our business and we have been working on how to resolve this.
Partner Insight: Dennis Hall, director and CEO of Yellowtail Financial Planning, Julia Dreblow, founder of SRI Financial Services and Frank Potaczek, head of UK proposition at Architas met in London to discuss how they broach the topic of sustainability...
Two-thirds cannot evidence compliance
'Elaborate breach of trust'
'How to buy protection insurance'
As this year has proved