Fiona Murphy asks advisers and providers about the ‘unintended' consequences of RDR and how issues around suitability and provider systems are driving the market.
Six months into RDR, advisers have been saying that they have been experiencing unintended consequences of the reforms.
Prudential head of business development Vince Smith- Hughes says: “Even though we’re over five months into RDR, there’s an awful lot of settling down and questions over how we move from the old world to the new world. And that particularly is one issue.”
It’s clear from evidence in the market that advisers are starting to do things slightly differently to meet the new rules.
Selectapension has been monitoring trends among advisers that use their platforms on a daily basis. The firm’s national accounts director, Peter Bradshaw says: “We looked at six month periods. It gives us an indication of how things have changed from January.
“If you look at the detail of what we’ve got, model portfolios was the most popular by a long way. That didn’t change up until the end of December. When you get into January, following RDR, it’s dropped down to third. What you can say with model portfolios is people are actually adopting portfolios that are pre-built and if they’re assessing clients’ attitudes to risk.”
Bradshaw refers to the Financial Conduct Authority’s paper on matching suitability and record keeping.
He says such trends in adviser working patterns suggest advisers are keeping this paper firmly in mind – “if you’re looking in more depth at certain product features and certain funds, you’re matching products more seriously.”
Smith-Hughes adds: “There’s lots of assistance with suitability in the market, a good example, we’ve noticed, for instance is drawdown. We’ve launched a new calculator which can help advisers target a particular yield and give a more accurate indication of what the position will be like in three years.
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