Client RDR guides: useful or no?
If you are struggling with the best way to explain RDR to your clients, a third-party guide may - or may not - be your best bet.
It almost sounds like a blackmail story. An overly-amorous gentleman has been photographed with his mistress, and he knows the pictures are going to be published in a tabloid the next day. Right now he’s pacing up and down, sweating and wondering: how will he tell his wife that he’s been cheating on her all along?
I’ve been reading RDR guides for consumers, and some of them do seem to have a confessional tone when it comes to fees: “Advice has never been free”, they say, or “You have always paid for advice”.
Are advisers having such a hard time breaking the news to their clients that they are relying on a third-party document to explain the situation? Also, who are these advisers that have until now hidden from their clients the fact that their wages are taken from the investment?
Most of the guides are fairly straightforward: “Changes are coming. Higher qualifications. Fees instead of commission. New requirements for independence”.
However, I have to wonder how useful these guides really are. They are written to be as inclusive as possible, and in doing so actually exclude themselves from usefulness for many advice firms.
If an adviser has already been charging fees for example, what use could these well-produced documents be if one third of the page is explaining what fees are and why they will pay them?
To be honest, I’ve made a few calls and so far haven’t found a single adviser who is using one. Not to knock the efforts of the providers, regulators and trade bodies who have provided this literature; their helpfulness is appreciated, but from what I gather most advisers are either cutting and pasting the relevant passages, or they are writing something up themselves which best suits their specific clients and business.
More than one adviser I spoke to said they weren’t using them simply because clients won’t read them. They don’t care! They just want straightforward, trustworthy service and aren’t paying an adviser to get an education in the subtleties of current financial services legislation.
This applies particularly to the lengthier guides, which unfortunately make up the majority. Only two guides I saw sum up the main points in a single page: the FSA and IFA Centre.
But again, horses for courses: The IFA Centre’s literature works in its own pro-independent agenda and therefore probably won’t be of much use to advisers who are thinking of going restricted, and looking desperately for the best way to break the news to their loyal clients.
As much as it pains me to say it, the FSA’s guide is probably the most succinct - and the most optimistic. While it doesn’t include the ire many advisers feel about the RDR, that might in this case be the best thing for people trying to communicate to their clients that the future of financial advice is in fact bright.