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Clear vision

Demonstrating an ongoing service is essential in the new RDR world and the first step is being clear about what you expect your business to achieve

Nick Kelly, Managing director, Sesame
Nick Kelly, Managing director, Sesame

The debate around qualifications and higher professional standards often dominates the RDR headlines but the reality is that the implications of the RDR are far wider than this and will permeate just about every aspect of a firm’s customer proposition, remuneration and marketing activity – in essence, their whole business model.

So, if yours is one of the many firms with significant work to do in order to move from where you are today to where you need to be on January 1, 2013, then where should you start? Well, one thing is certain – every firm is different and there is certainly no panacea. However, to manage change successfully, starting off with a clear vision of what it is you are trying to achieve is essential. That vision needs to take into account the broad principles of the RDR and how that will affect your business.

Demonstrating that you are delivering an ongoing service will be essential in the new RDR world and that constitutes more than simply sending out a monthly newsletter telling clients what is happening in the investment market. You need to understand the principles of what the RDR is requiring you to do and then look at the implications for your business and existing client base, along with the type of prospective clients you are looking to target in the future. That will probably include high-net-worth individuals, but most firms only tend to have a scattering of those clients and the mass affluent continues to be the space in which most firms operate, with the majority of business generated through referrals.

Platforms will also be an integral part of firms’ future strategies and the model for many will be to transition as much of the value they have
in packaged products onto platforms so that they can boost the level of service that clients receive in return for that trail commission.

The relevant strengths and weaknesses that each firm possesses will ultimately determine the changes made. Looking at the skill set within your firm will tell you whether certain business lines should be written in-house or outsourced. Complex pensions and equity release business
is a good example of this, with an increasing number of firms choosing to refer this business onto a specialist, thereby extending the range ofservices available to clients and generating more income for the firm. The advantage here is that you do not need to carry the embedded fixed costs, such as the specialist staff and infrastructure, required to write the business yourself. By thinking broadly about your proposition, you will have the ability to take advantage of opportunities that come along.

FSA: RDR principles
FSA: RDR principles

Your business vision will also be influenced by whether you have an end goal. For instance, if you are looking to sell your business in 10 years, your outlook will be quite different to someone who is planning to be around for 30 years.

Along the way there have to be milestones – setting a goal, articulating a goal and then breaking it down into its constituent parts, depending on the areas of business in which you operate and the scope of advice you wish to offer, be that whole of market or restricted advice.

Once a firm’s vision is realised, it will materially add value to the business and if it is not adding value, then it is not the right vision. Change is difficult and has risks attached so you have to very dedicated and focused but the winners from this will undoubtedly emerge stronger and more prosperous.

So, with the right vision and motivation, you can emerge from this challenging process in a very healthy position.

However, you should not feel as if you are undertaking this challenge alone. Adviser practices will need some element of support to make the transition while continuing to run a profitable business and there are support service providers to help in this process.


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