Aifa and Sesame have rejected Clerical Medical’s suggestions that advisers who think they cannot meet retail distribution review requirements should consider selling up now and not rely on networks to be their saviour.
Clerical Medical head of intermediary strategic planning David Shelton says firms in the middle ground which do not want to take the RDR “hit” need to “think seriously about being acquired now from a position of strength before being devalued by the review”.
But Aifa says it is far too early to make such judgements.
Deputy director Fay Goddard says: “These appear extremely hasty comments considering the RDR is still at discussion paper stage. The fact is that IFAs are notably adaptable to new conditions and most members are doing very well at the moment.”
Shelton also warns that firms which believe that networks will be their “saviour” are misguided as the extra costs of remuneration changes, increased qualifications and capital adequacy have to be passed on.
But Sesame chief executive Patrick Gale has hit back, saying the RDR will signal the “renaissance” of networks and big nationals as well as a natural shift from DA to AR for many small firms.
Gale says big nationals and networks are used to operating to scale and building in regulatory costs and could potentially be beneficiaries of FSA plans for risk-adjusted capital requirements.
Gale says: “The RDR creates a better environment for networks and nationals. Small firms will have to choose between the increased personal costs of DA or going AR and paying the ongoing service charges. Many will choose the latter.”
Tony Catt IFA sole practit-ioner Tony Catt says: “Our businesses have already been devalued by the discussion paper. The damage is done. I am moving under the umbrella of another firm to deal with the expected hit.”