Your Industry  

Life after RDR: How advisers can seek support from providers

More than five years ago the FSA published the recommendations of its retail distribution review (RDR). Events since then have only made the RDR more relevant, galvanising the consensus for a clear, fair and more competitive retail investment market.

The transition to the new regime begins in January 2013. Foremost in advisers’ minds will be the need to protect their revenue streams in the face of a new fee model, a challenging investment market, and a jumpy client base.

It is adapt or die, and advisers can’t be expected to survive the biggest shake up of the financial advice landscape in living memory alone, which is why the continued and expanded support of investment providers is absolutely key.

Article continues after advert

A different kind of support

The key question now for advisers is what to ask for from their providers to help them remain profitable and successful in the new environment beyond the more straightforward issue of compliance. Most investment providers have been helping IFAs plan for the post-RDR era for some time, so dedicated RDR compliance guidance is now plentiful.

Beyond help with regulatory compliance, the most obvious way providers can support advisers is to offer a strong range of RDR-ready products backed by effective sales and marketing collateral.

In practice the retail investment market is an increasingly level playing field in this respect. Moreover, what will change most post-RDR won’t be the products per se, but the way advisers sell them.

That is why the most effective support a provider can give advisers over the next 12 months, certainly in terms of competitive advantage, is a different kind of support – business support.

Insight beyond finance

It is in cross-business functions like marketing, customer relationship management and e-commerce that providers can make the biggest contribution to advisers, especially during the post-RDR transition period.

Advisers should look to providers that can offer support in these areas as they begin to redefine their business models. These functions will become increasingly important as commission-led sales come to an end.

Client targeting is one good example. The new two-stream fee advice model incentivises IFAs to manage their time much more carefully.

A facilitated advice product such as an Isa might not offer much in the way of a fee, so an adviser is best offering a succinct, near-automated service to make margin.

And while a fee-based IHT plan might involve time-consuming research and a series of face-to-face consultations, the fee earned will be relatively high.

The most successful advisers, therefore, will be those who spend their time most profitably and this is where providers are in a unique position to help.

Leading providers routinely apply audience segmentation techniques in the course of their marketing and product development programmes. They work with partners who are experts in customer profiling, data analysis and back office systems.

By sharing this knowledge, providers can help advisers maximise their time-spent to fee-earned ratios by targeting the right people at the right time with the right message.