In the run-up to the RDR and in the first quarter of this year, there was a lot of speculation that the size of the adviser industry would shrink.
Not only did business models have to change, but there were a multitude of exams advisers had to complete in order to stay in business.
In spite of this, the latest FCA figures show that the number of advisers operating in the UK market actually rose 6 per cent in the first half of the year. The FCA has attributed this rise to an increase in advisers re-entering the market.
It added that nearly all (97 per cent) of advisers have now reached the appropriate level of qualification and most of those that have not yet completed their exams will do so within the permitted timescales.
So what does this tell us?
Firstly, the adviser community is resilient to change. It has proved time and again that it will adapt to the evolving regulatory landscape. It also tells us that the RDR had set a path that advisers had already begun taking, long before the RDR was spoken of.
I believe the majority of advisers have always been driven by good client outcomes; it is now clear that the commodity that is being purchased is ‘advice’ and so optimal customer results have to be the focus.
The transition to adviser charging – perhaps the biggest change for advisers and their clients – has taken place relatively smoothly. Our own figures show that approximately half of the assets on our platform are now held within an adviser-charging structure. In addition, our adviser research shows that two-thirds of advisers say that they intend to move all their clients to an adviser-charging model within the next 12 months.
This evidence is important for platform service providers. It serves to underline the fact that advisers are perfectly capable of adapting to the new rules at their own pace.
For me, it made the decision about whether to take a one-size-fits-all approach of moving customers en masse from our bundled model to an unbundled, adviser-fee model unnecessary.
The adviser is clearly in the best position to judge when any move to an adviser-charging model is in the best interests of any individual client and should be given the flexibility to transition to an unbundled environment according to their own timetable. We are currently speaking with advisers to find out how best we can support that review process.
The resilience with which the adviser community is adapting to the changing business landscape demonstrates that the RDR, far from being perceived as a cataclysm, has in fact been the catalyst that has brought to the fore the innate professionalism at the heart of our business.
Peter Mann is managing director UK at Skandia