Are you afraid that when the RDR arrives the public will perceive advisers as charging fees for all products and so not consider coming to you for protection advice?
Alan Lakey, Highclere Financial Services
It's a mad world out there and the RDR only serves to reinforce such a view. Do consumers differentiate between investment advice and protection advice? I think not, to them it is simply financial advice, thus the appellation ‘financial adviser'.
Regulatory differentiation between products will assuredly create confusion and a reluctance to engage with the industry, something which should strike any innocent observer as bizarre because a reduction in consumer confusion is purportedly one of the main planks of the RDR proposition.
Simplicity sells. This age-eroded maxim still resonates with truth although a better phrase, perhaps, would be complexity suffocates. So what will potential clients think when bombarded with journalistic messages concerning customer agreed fees? It is not unreasonable to suppose that they will fail to distinguish between the twin regimes and believe that protection plans must be fee-based.
This may assist the aggregators but few others. It is difficult enough trying to persuade consumers to make sensible decisions regarding matters of protection without having the unnecessary prelude of a discussion about how and why the regulator has added a layer of confusion to the buying/selling/advising process.
As with investments and pensions, the RDR will not induce consumers to interact with advisers. In fact, it is much more likely that business levels will falter due to the perception that fees may be levied. How ironic then that RDR supremo, Sheila Nicoll, has stated that the proposals will, ‘ensure that the perception, and indeed reality, of bias is removed.'
Peter Chadborn, Plan Money
Unless the introduction of RDR is actively promoted to the public they will be blissfully unaware, just like they were with previous regulatory developments, such as depolarisation. If the ramifications of RDR are highlighted by consumer media then there is a possibility the misguided notion that all financial advice will have to be paid for by writing a cheque could discourage consumer engagement.
The public do not generally distinguish between investment advice, protection advice and mortgage advice. To them it is all often combined under the broad heading of financial advice and this can even be extended to what cash ISA to buy.
I think, by and large, the consumer media understand this and therefore it is unlikely that RDR will gain much coverage without specifying that it affects investment advice only.
In the interests of transparency we have always disclosed our protection commission. The RDR's objective of promoting remuneration transparency and mutual understanding of service levels is actually in line with consumers' desires and what is influencing their buying habits. Therefore, anyone providing a service, particularly financial services, should get used to disclosing their remuneration lest they get accused of having something to hide which of course does nothing to instil trust.
Not only does this make good business sense, it will also go a long way towards proving to the wider financial industry that advisers operating in the protection space are professionals providing a service rather than ‘old school' salesmen of dubious intent.
Peter Lurie, Proactive Medical and Life
When discussing the whole ethos of RDR with many other advisers nobody seems to know how it will really impact on the industry and more importantly, the consumer. Some think it will come in and phase out like Home Information Packs did with the property market, others feel that it will force many IFAs out of business or cause many advisers to leave.
I believe protection products have to be sold, and therefore the justification of a fee based on these types of sales could put people off buying from the outset, and being clear in the initial stages of sale is key to establishing a position.
Customers need to feel confident that when they approach an adviser, the fees clock is not ‘ticking'. They should feel free to have as much time as they need to get the right advice, comfortable and confident that they understand the options and alternatives available to them, and that there adviser will be on call to deal with queries. With an open ended fee structure, they may be put off taking up the essential cover and family protection they need. With benefit cuts, the role of the adviser has become even more crucial.
One of our great lines is ‘our advice is free and will not affect your premiums,' it cannot be clearer than that, and as most of our clients realise from the outset that these products are commission-based, it makes it easier for the client to make a choice based both on the type of cover that is offered and the premium levels. We don't think that this will be a barrier but rather a great selling point for us to create a more transparent sales environment.
Neil Armitage, Foresters Friendly Society
Any suggestion that the RDR will sound the death knell of free advice should put providers on alert. This is certainly true for Foresters Friendly Society, which relies upon intermediaries as a critical sales channel on the premise of product suitability, not mainstream brand awareness, as the determining factor in client solution choices.
We have invested significantly during the past two years in building understanding and awareness of our products among intermediaries. This has focused in part upon our 50 plus life cover and sickness policy offerings.
The intention of the RDR was to provide access to free advice to those who could not afford it yet how this will be delivered remains unclear. This resonates when considering our membership targets the ordinary people among those least able to pay for advice.
Should this scenario come to pass there will be a surge in orphan clients. In that event the likelihood is that providers with bigger sales and marketing budgets will sweep up these relationships through targeted direct communications.
This is why smaller providers who rely upon the IFA community must stand behind concerned intermediaries between now and mid-January, when the deadline falls on the Treasury Select Committee request for written submissions on the current RDR proposals.
The essence of this request is to ascertain whether the RDR is genuinely the best route to increasing access, transparency and higher service levels for consumers. It can only be hoped that a level playing field is maintained for providers too.
