IFP vice-president: IFAs must evolve beyond advice post-RDR

In the post-Retail Distribution Review world advisers will need to evolve away from transactional-based ‘advice’ to develop holistic financial planning services to stave off competition from online execution-only offerings, according to Forty Two Wealth Management’s Alan Dick.

Mr Dick, who was earlier this week confirmed as the new vice-president of the Institute of Financial Planning, warned that the prevalence of online direct-to-consumer services is likely to grow from 2013 and that some advisers could be squeezed out of the market.

In an interview with FTAdviser on his firm’s RDR plans, to be published later today, Mr Dick argues that services such as execution-only which allow customers to easily choose and buy their own products online will directly compete with advisers who focus on the sales side of business.

Drawing a distinction between such a sales-focused offering and a tailored financial planning service, he says advisers should take a more goal-oriented, long-term financial planning approach, thus continuing to provide a service that customers could not find elsewhere.

However, he warns that switching approaches is not an “overnight” process that could in fact take four or more years. He therefore warns that, with only four months left before the RDR comes into effect, currently sales-focused firms may find themselves out in the cold after the change.

Mr Dick said: “It takes several years and a lot of time to convert clients. It took us four to five years but we have only got four months until RDR and everyone I have spoken to about the transition has said it is a five-year transition.

“You have to have new business coming in but that isn’t the main focus anymore because you have made the focus transition to recurring income.”