IFP urges advisers to ensure they are RDR-ready
Financial advisers need to ensure their business models can stand up to the rigours of the post-RDR world, the Institute of Financial Planning has warned.
Sue Whitbread, communications director at the IFP, said the body was concerned that some advisers would not complete their qualifications and gap-fill before the RDR proposals came into force in the new year.
But an even bigger concern arose when discussing business transition, and how business models will have to change to meet RDR requirements - with the IFP urging the industry not to ignore the effects of changing from a commission to fee-based model.
Ms Whitbread said: “Yes, of course it is important that advisers complete their qualifications and gap-fill requirements and get their statement of professional standing in good time, and while most are addressing the issue, there are still some who aren’t, which is a serious concern. This is not a deadline that any adviser will want to miss, yet time is most certainly running out.
“As an accredited body, the IFP is constantly reminding and encouraging our members to get RDR-ready now. We’re providing all sorts of opportunities for gap-fill in particular, combining both structured and unstructured learning to meet the outcomes as required under RDR.
“But for many advisers, making sure their qualifications are RDR-compliant is perhaps the easiest part. When it comes to their business processes, that’s a different matter. We are worried that many advisers and firms are not facing up to the changes they will have to make if they are to survive, let alone thrive, from January onwards.
“Many seem to be underestimating the impact that such a dramatic change in regulation is going to have on their business. In the past, IFP members have commented that when they have moved to a fee-based model from commission it has taken them three or four years to complete the transition.
“With the host of changes including those of due diligence, platform considerations, independent or restricted as well as remuneration, firms need to ensure that their business plan is robust enough to address all the issues. Having a strong client proposition is key. Demonstrating that you can add real value to a clients situation is essential if they are to be happy to pay the requisite fees for that service.”
Lee Travis, the chief executive of the Simply Biz-owned New Model Business Academy, said: “Now is definitely the time to act before it’s too late. In my experience there is a large proportion of the industry which is all ready, but some do need a helping hand.”
He added that the not-for-profit NMBA had a number of resources to aid the transition to a charging model, including a “best practice club” where IFAs gather to share their experiences of becoming RDR-ready every quarter, in addition to online tools and training sessions.
Mr Travis said: “It is important now to take time out to plan for these changes.”