I recently wrote of my concerns over the current level of adviser apathy in respect of the Retail Distribution Review (RDR). The research conducted by Assureweb, a technology partner for IFAs, concluded that a significant proportion of advisers (32%) are not concerned about the impact of the RDR on their business over the next 12 months. I would like to explain why I raised such concerns at this point in time.
I can understand current apathy to some degree, with the FSA suggesting reasonable lead in times for change and the fuller detail of their recommendations against industry feedback not being fully published until November 2008.
However, for those advisers who are not planning for a post RDR world, there are wider potential threats in that their competitors and other financial institutions will be doing so and thus will be better prepared to react to the FSA's formalised feedback and recommendations. Without some level of planning around business models and propositions the potential market and existing clients could be restricted by those other parties.
The basis of my comments does not come from the capital adequacy of providers or qualification issues, but from the opportunity and threats created by the new advised and non-advised models and customer agreed remuneration.
I believe financial adviser firms should be thinking about the potential fallout of the report and how that might affect them. For example, what if product providers capitalise on non-advised sales through heavy infrastructure and technology investments? Or what if competing advice firms seek to capitalise on effective lead generation services and strong technology platforms supporting low cost, high value client service model? If such propositions were to directly target existing clients or key local leads, what would that mean for those firms that were late entrants to the market with similar propositions?
The key to effective consideration, I think, must be to respond to a number of initial fundamentals such as how can effective databases be generated both in terms of new and existing clients? How can firms offer a competitive level of service and manage clients efficiently in terms of full and focused advice, non-advised sales and business management? I firmly believe technology plays a key part in answering such questions. Being aware of these high level responses creates a level of readiness for the detail of the FSA's feedback.
Where recurring revenue models can be created for an advised solution the opportunity also exists for non-advised sales to existing clients through the use of web services. Using technology effectively to join together effective adviser services and business management processes, including client marketing, creates a long-term sustainable model and reduces the threats from larger organisations.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till