The eyes of the world have been on the UK during its unprecedented summer of celebrations, with the Queen’s Jubilee, the Olympics and the Paralympics. As we get back to business as usual, financial regulators around the globe will increasingly be watching the progress of RDR, given that we are considered to be one of the world leaders in financial services.
Although some firms are fully prepared and RDR-ready, many more will be increasing their focus on the changes that need to be made to their businesses in the run-up to the end of the year. To date, the feedback we have been getting is that firms have considered their position now, considered what they want their business to look like in the future and segmented their clients to fit in to that model.
Communicating the client proposition is the next step and one that some firms are finding a little more difficult. Most firms will have segmented their clients into a number of groups depending on affluence, level of service and advice that they are likely to need. This may well be the first time that firms have considered their client base in this way but it will need to be done unless the decision has been made to only take on clients that have the same requirements.
Your client proposition should be:
Transparent: A description of what you do for clients, when you will do it and how you add value to them, for example, frequency of review, adviser access, services that you offer. These services can include complete financial planning, tax and estate planning, financial independence, reducing risk and volatility. Core value services can include access to qualified financial advice offering clients peace of mind.
Clear: Use plain English. Avoid using financial services’ terminology and abbreviations. Think about how your client will read your literature. Does it provide the professionalism and reassurance you are aiming for?
Compliant: This should take into account the compliance requirements of the RDR – disclosure of status and what this entails (for example, full, limited or restricted analysis of the market), charging structure and level of qualifications (for example, QCF level 4).
Relevant / Segmented: If you offer different levels of service, clearly define and state what these are.
It may be that your existing clients will see no difference in the way that they receive advice from you, be it independent, restricted or a mix of both. Being able to communicate the value of your proposition to existing and potential clients will be an important factor.
In partnership with Zurich, Aifa has developed a modular-based business transition programme which includes information on the client proposition and more. Details can be found at http://www.aifaffwd.net/en/index.php
Linda Smith is senior technical analyst at Aifa