RegulationMay 20 2013

Clients should belong to the firm, not adviser, post-RDR

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ByMichael Trudeau

Expanding the role of paraplanners or internal advisers in order to ensure clients belong to the firm rather than an individual adviser will help companies prosper in the the post-Retail Distribution Review environment, a new report claims.

A new report from CWC Research and FundsNetwork outlines recommendations for optimising advice business post-RDR, including holding clients at firm level in order to ensure that the value of the client book is held by the business and is not undermined by potential adviser exits.

Focusing on small to medium sized firms, the guide speculates on the best business model to deal with increasing regulatory cost, more demanding customers and explicit charging.

The report also recommends clear demonstration of added value and an advice process which is uniform to all advisers within that firm. It also recommends firms consider a dedicated management team if the firm is big enough to sustain it is focused on “building shareholder value”.

Clive Waller, managing director of CWC Research, said: “Adviser firms have made huge strides in changing their business models to meet the requirements of the RDR.

“However, this is only the starting point as all stakeholders - asset managers, platforms and distributors - will be evolving their propositions and new entrants will be pushing the boundaries to challenge current players.

“The successful adviser business will be curious and will want to continue the process of their evolution. It is the purpose of this paper to try and see what ‘good’ will look like in the coming years.”