Moving from commission to fees not enough for RDR
Just moving from charging a commission to providing fee-based advice is not going to be enough to survive the retail distribution review (RDR), SSP Swift has claimed.
The technology provider said advisers need to reduce their administration costs and increase adviser productivity to be able to justify charging fees.
Shaminder Gill, products manager at SSP Swift, said administration does not add value for advisers and instead it detracts so the cost of administration has to be decreased.
Mr Gill said: "Previously there was not a need for servicing clients, but the RDR is saying there is a need for ongoing service.
"Advisers cannot justify a move to fees without ongoing service.
"They need to increase the productivity of advisers and reduce the cost of the back office."
Mr Gill pointed to SSP Swift's work with the adviser firm Medical Money Management.
He said the firm has reduced its back office costs by about 25 per cent and is increasing adviser productivity by giving advisers technological tools.
Mr Gill said: "The two drivers that are driving the whole business are increasing adviser productivity and reducing the cost of service.
"This is all due to the RDR and moving to a fee based world.
"It takes regulation to make people think about what they are doing and change."
Mr Gill warned firms which had not already started putting systems in place to deal with administration and adviser productivity only have until July or August this year to get started in time for the RDR.
He said: "Advisers need to make commitments this year by July or August.
"In the next six month they have to have all of their service proposition together and they have to have segmented their client bank as there will be a whole host of clients they will no longer be able to service."