So what will replace the most asked question of 2012? Don’t say you’ve forgotten it already? It went something like this: How RDR ready are you?, or a variant of it.
It almost reached the point where I could not answer the phone without a researcher or someone else wanting to discover my state of RDR readiness. I resisted the urge to respond with: “We’re at DefCon four”.
Then there were the others, provider representatives mostly, whose “hello” was quickly followed by a statement such as “I bet you’re sick of everyone asking you about RDR”. The answer being yes, and equally sick of those who state the bleedin’ obvious. So what is next? What riveting question are we going to be asked as though mankind is not going to survive without the answer?
I am going to hazard a guess and suggest the big question on everyone’s lips this year will be: “restricted or independent?”. In fact I have already had a few probing questions regarding my status – and I am tempted to say: “I’m moving to DefCon 5”.
I am sure the networks and other similar support groups have already worked out that a majority of consumers will not really understand (or care) about the differences between restricted and independent, and as soon as advisers work it out, they will also cease to care as much as they do.
But it will not be any indifference to a label that will trigger any moves to restricted. It will be an inability for some advisers to successfully charge and collect fees that will determine their future direction. Of course, if you are a St James’s Place “partner” it is business as usual; three plus a half. And that is going to be tempting to some people, someone else in the corporate structure setting the pain threshold, and the adviser simply following orders.
It is not only St James’s Place, there are other networks and organisations doing something similar. For advisers who are unsure about how to charge fees based on the value they bring to the table, having someone else set the fee agenda is an easier sell.
It was not so long ago that people were beginning to write off the networks as a model well past its sell by date. Commission clubs they are not, but refocusing on other areas, especially an infrastructure that enables fees to be charged and collected with the minimum of fuss and negotiation might be one of them.
It is not for me, but then I have already gone through many years of pain adjusting my business to run profitably on fees. I started in 2006 and think I am nearly there. Certainly the big errors have been made already - they were painful, I can tell you.
So, when push comes to shove, will it be about restricted or independence this year? I think it will, but not for ideological reasons.
When push comes to shove, will it be about restricted or independence this year? I think it will, but not for ideological reasons.Dennis Hall is managing director of Yellowtail Financial Planning
