In Focus: Openwork lays out post-RDR predictions

Philip Martin proposition and marketing director for multi-tie adviser network Openwork, believes that along with the other sweeping changes brought about by the RDR, his firm will experience a shift in balance as advisers decide where they want to stand and what they want to offer.

Zurich-owned Openwork claims to be the largest multi-tie mortgage and financial advice network in the UK. It currently serves about 2,200 advisers, split across two areas: mortgages and protection, and investment and pensions.

The company is no stranger to controversy, with some advisers having spoken out against the company by saying it includes clauses in its contracts which allow it to poach clients from advisers who leave the network.

Mr Martin dismisses such criticisms, saying: “Obviously Openwork has got to constantly ensure that the proposition is attractive and contractual terms form part of that. If we didn’t have an attractive contract people wouldn’t join us, yet people continue to join.”

But while these issues occasionally flare up, perhaps the firm’s view on the affects of the RDR on the advice provided across the sector have caused the most opprobrium.

Restricted advice

As any adviser already knows, two major sticking points for advisers in the RDR debacle are the loss of commission and the increasingly stringent requirements for keeping the title ‘independent’.

This latter has been a particular focal point of anger across the sector, but Mr Martin, whose firm already houses a large proportion of multi-tied advisers that will become ‘restricted’ post-RDR, is sanguine about the change.

Indeed, he is predicting a movement to restricted that will caused by the new requirements, but also by what he terms “attractive pricing”.

“A lot of people intend to remain independent but eventually people will move to a restricted model. Intent and end outcome are two completely different things.

“My hypothesis is eventually the offering you can give to your clients will look more attractive as a restricted rather than independent adviser.

“That is not the case now but this is future thinking. As restricted advice takes more and more of a hold the cost to clients will go down. It will be cheaper in the hands of the client post-RDR.

According to Mr Martin, product providers will have to fight more viciously for space with whole-of-market advisers, whereas joining a restricted network would mean uninterrupted access to a stream of potential buyers.

Because providers would be so eager to join the networks, Mr Martin says they will lower their prices in anticipation of higher business levels.

This would mean restricted advisers could offer better rates to their customers and thereby have a more attractive proposition than their independent counterparts. In a world where customers pay fees for advice, the difference in price could be a significant determining factor of success.