Ian McKenna: How prepared is Cofunds for RDR?
As part of a regular series, Ian McKenna looks at how the platform is getting ready for RDR (see right for previous columns).
When you consider how young Cofunds is as a business, relative to many of the other players in the market, the fact that the organisation can now claim £34bn of assets under administration for a company that is little more than a decade old is phenomenal. But despite its success, it is far from resting on its laurels when it comes to RDR preparation.
Asked to identify the major areas where the company has delivered change in preparing for the new world, proposition director Verona Smith quickly focused on the additional resources put in place to help advisers with their transition and especially the company’s platform consultancy team.
This team, made up of office and field-based consultants, is being expanded. Its work is supported by a range of tools designed to help advisers with each stage of the transition. Where advisers may have identified how to make the transition in some areas but not others, these tools are designed to be used individually, as well as a whole suite.
Cofunds points out that because of the wide range of adviser firms they have been helping in this way, they are able to play a significant role in knowledge-sharing between IFA firms where organisations are happy for their experiences and other collateral to be shared.
Although Cofunds did not raise the point, I am detecting considerable concern in the marketplace that many adviser firms have left it too late to begin their transition, especially when one considers that many of those who have made the switch say it takes years rather than the months that are left to adjust the operating methods of an adviser firm.
Against this background, it is important to understand that sharing knowledge makes a vast amount of sense.
Smith also cites the way in which Cofunds has delivered the ability for advisers to support a wide range of different customer service propositions as a core part of the ways it is looking to support advisers.
The company has made a vast investment in technology in recent years so advisers can offer a wide range of different service levels. Different customer segments can be provided with varying levels of service functionality and reporting so, in effect, the platform becomes a vehicle through which advisers can deliver their different propositions.
Some clients may be offered a simple ability to view their investments online whereas others could be provided with the capacity to buy, sell and switch. Further service differentiation can be achieved from the frequency with which clients are supplied with aggregated reporting. The capability to provide detailed regular reporting to clients is now an integral part of the Cofunds’ platform. This has been put in place with the explicit objective to support advisers’ service delivery after the RDR is implemented.
We will see Cofunds’ unbundled charging proposition revealed later in the year and the platform has also made a significant investment in enhancing its adviser-charging capability so it will be possible for advisers to establish up-front, ad hoc and regular charges electronically to clients. This is an area where the platform community generally is outperforming some traditional insurers.
The nearer we get to the RDR the more I am becoming concerned by the behaviour of a small number of life offices, which are essentially taking the attitude that IFAs will get what they are given and have to like it when it comes to supporting advisers’ information needs in the context of delivering future RMAR returns and other information.
I accept there are highly onerous data requirements being placed on advisers in completing their regulatory reporting but this approach could be counterproductive if companies are unable to meet advisers’ need for this information as many will simply use this as a valid reason to encourage clients to move investments to businesses that can deliver this without creating additional costs for consumers.
Imagine being the control function in an advisory business, that is, the person who is exposed to the risk of unlimited personal fines and even a lifetime ban from the industry, if you find that some life companies cannot fully support your reporting needs.
In all probability, those companies will be immediately prohibited from receiving further business.
The myopia that is evident in some life companies never ceases to amaze me. Such companies should realise outsourcing your back-book admin to a third party is tantamount to putting up a big sign saying to advisers “We don’t care about these customers, you had better find another home for their investments.” I worry for their future.
This is manna from heaven for the platform community and a small band of life offices which recognise the opportunity to create new, very low cost products for consumers who do not need all that a platform has to offer.
Given the extent of work it has done to help advisers deliver a streamlined electronic end-to-end process to support a wide range of customer propositions Cofunds is ideally placed to take advantage of a mountain of money that will cascade from life offices which have outsourced legacy customers and are failing to deliver the service and other support that consumers and advisers have every right to expect but which some companies are choosing not to provide.