Moving to a fee-based model that clients accept

Much of the focus on RDR readiness has been around compliance with the new requirements. For example, attaining the minimum qualifications and deciding whether to remain fully independent, offer restricted advice or both.

While this is vital, it’s equally important that advisers focus on the commercial implications of RDR. How do you move to the point where clients effortlessly pay fees for your services?

In this new series of articles we’ll assume your business is ‘fit for purpose’ and consider how best to position your firm for success post RDR. At its simplest, that means putting advice at the heart of everything you do.

Over the coming weeks we’ll look at the building blocks of creating a cohesive advice proposition. This will include a clear articulation of what it is you do for your clients, an explanation of what ‘advice’ actually means, a definition of your target market and an analysis of what sets you aside from the competition.

Let’s start with establishing your credentials. A credentials pitch is where you position your business alongside other professionals that charge fees like accountants and solicitors. It should clearly signal to clients that you’re comparable to these professionals.

The ingredients in a compelling credential pitch will commonly include these elements:

• Stress the high standards of qualifications post RDR . Don’t assume for a minute that your clients have any appreciation of the requirements to become an IFA post RDR. Make sure they realise that QCF Level 4 is comparable to the components in a first year degree course. The implication should be clear: They’re not dealing with a salesperson – they’re dealing with a professional.

• Emphasise the strict governance applied to IFA firms. You should explain the increased regulatory requirements and strict compliance regime. Include the increased capital requirements that will require firms to maintain a minimum of £20,000 or three months of fixed expenditure in liquid assets from 2015.

• Position the payment of fees positively. Fees are generally a good thing for all concerned. They liberate you to act exclusively in the client’s interest. They allow you to recommend products that you may have struggled to recommend pre RDR (either because they didn’t generate a commission or the commission wasn’t enough to cover your costs).

• Demonstrate your ongoing commitment to professional development. Allied to the high standards required to qualify as an IFA, there is the ongoing requirement for professional development. Outline the steps you’re taking to monitor that the new requirements of a minimum of 35 hours per year CPD will be met. If you’re planning to go beyond these minimum requirements, let your clients know.