RDR Countdown - December 2011
There is no doubt that the RDR has divided opinion. Despite it only being a year away there are many in the industry who are still hoping that it will be amended, delayed or scrapped altogether.
Despite the flurry of activity around the Treasury Select Committee’s suggestion earlier this year to delay RDR by 12 months, the FSA quelled any hopes for this rather rapidly.
However, a recent poll by Opinium research found that this rebuttal from the FSA has not stopped a large portion of the industry from hoping. It found that 54% of the more than 200 IFAs questioned thought that the 31 December 2012 deadline should be delayed.
The findings also showed how unprepared some are for the deadline, with 40% not feeling ready to bin commission and adopt adviser charging, while a third think that they will not be up to level four in time.
However, the research did not offer up just doom and gloom – with 80% of advisers being well on their way to having an adviser charging model, while there has also been a 20% increase in the number of advisers who think that they will be Level 4 qualified come the deadline when compared to a year ago.
This divide shown in the research epitomises the split in the industry, with half wanting a delay and the other half being ready for the deadline, more than half having moved to adviser charging and the rest lagging behind.
It is likely that much of this split is because many are unsure what RDR will actually bring.
Estimates of how many people will leave the industry vary according to who is peddling them and which set of advisers they ask. Undoubtedly some will leave, the industry will contract and some clients will find themselves without advice. But many argue that that is a fair price to pay for gaining professionalism and a higher standing for the industry.
The FSA has not paved a smooth path for RDR, leaving key policy decisions until the last minute, failing to create certainty around some areas of the industry and being slow to respond on others.
This prolonged approach, riddled with changes, has left many questioning whether the original aims of the RDR are likely to be realised or if they have become so distorted overtime that they were lost long ago.
Regardless of whether advisers are ready or not, it now seems unavoidable that the RDR will hit come 2013. But RDR does not just mean taking exams and scrapping commission. Many have mooted it as the tipping point for myriad issues in the industry, from use of technology and getting business models in order to assessing client banks and profitability of the firm.
One thing’s for sure, RDR is coming and the countdown has begun.
IN THIS REPORT
Advisers are starting to think about just how much their clients are worth. But, as Holly Black discovers, value can be measured in different ways
Many predict that the RDR will push down fund fees, with more low cost active funds bridging the gap between active and passive. Aimee Steen asks,...
While some IFAs are being dragged kicking and screaming towards the RDR deadline, many others have already embraced the need for change.
RDR will bring its own unique technology problems for IFAs. Thomas Coles looks at the changes that need to be made for IFAs’ technology to be RDR...
Platforms are booming in popularity, but are they ready for life post RDR? Laura Suter investigates