Advisers and major networks that have attempted to replicate a pre-Retail Distribution Review model in the new world are “flailing” and will “continue to struggle” next year, while early adopters specialising in “softer skills” are flourishing, according to Nucleus.
As the new regime approaches its one-year anniversary, a spokesperson for the adviser-led platform said there are still too many intermediaries “bleating on about RDR”, while many of the larger networks are desperately revising business models after the lifeblood of provider payments was withdrawn.
The spokesperson added that issues surrounding superclean shares still need to be addressed some platforms are being economical with the truth of whether they can influence flows.
He said: “We currently have a situation where on the one hand platforms are claiming to asset managers they are able to influence flows and hence ‘deserve’ superclean terms, while on the other they are in complete denial of the same so that advisers might fulfil their more onerous due diligence obligations.”
Recently, concern was raised that restricted advisers may be offered superclean terms over and above those offered to platforms in return for positions on panels and assurances over distribution market share.
Research conducted by International Financial Data Services and CWC Research found two-thirds of asset managers who would consider launching discounted shares were “attracted to restricted propositions” and half would “look for influence over distribution”.
The Nucleus spokesperson said now the market is almost 12 months into a fee-based operating model it is “more evident than ever” that some market participants are understanding the cultural change required while others are not.
The spokesperson said too many provides have made “the letter of the law shift” but are nowhere near to making the cultural one.
He said: “Too many advisers are still bleating on about RDR instead of focusing on better client outcomes. Those ‘crazies’ who got the ball rolling in the late twentieth century didn’t need a regulator to get them up in the morning.
“No, they saw an opportunity driven by a commercial rather than a regulatory agenda. There are now thousands of them, all at different stages of the journey.
“Those advisers whose journeys haven’t yet started... are struggling and are going to continue to struggle. It’s starting to be evidenced in the flailing business models of the big adviser networks, no longer able to rely on provider payments to keep the wheels turning.”
However, the spokesperson added that those advisers who had a successful transition in the post-RDR world seem to be having a great year, and those that started the journey more than five years ago “are having an outstanding year”.
He said: “From what I can see the successful advisers of the future are going to be bigger on the softer skills – great relationship management, strong empathy, adaptability and flexibility. And the successful providers of the future are certainly not going to be those dealing in dirty margins.”