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Direct wraps could have role for advisers

Deane: ‘Collaborative process’
Deane: ‘Collaborative process’

Standard Life business development manager Andrew Lock says successful firms after the RDR will need a clear client value proposition and ensure they are not dependent on a keyperson.

He said: “The best practice firms have a clearly defined client value proposition to demonstrate to customers the value they get from their service. It must state who you are as an advisory firm, what you do, how you do it and how you charge for the advice.

“The second point is about independent income generation. We all know commission is about to disappear so firms must generate independent income streams from clients. Typically, we see that happen as a firm adopts a new business model and, in particular, starts to use a wrap platform.”

Lock said firms must align stakeholders within the business to ensure all staff are motivated to achieve a common end goal and there cannot be a “keyman dependency” within any firm, regardless of size.

He added: “Risk management must be built into every process. Best practice firms embrace regulation and ensure it is woven into the fabric of the business.”Advisers should look at the potential role for direct-to-consumer wraps for servicing their lower-income clients, according to Ascentric.

Thorman: ‘Direct to consumer’
Thorman: ‘Direct to consumer’

At the Money Marketing RDR Invitational in London last week, Ascentric managing director Hugo Thorman said that the RDR will make advice unaffordable for some.

He said: “The FSA is going to implement adviser-charging and there are a lot of clients out there who do not want or cannot afford the sort of costs that might be expected.

“Advisers need to work out which clients they could encourage to go on to a wrap and serve themselves and that is where the direct to consumer comes in. What I think wrap platforms will be doing is providing direct-to-consumer facilities for their own supporting advisers so that they can take advantage of that opportunity.”

Scottish Life chief executive John Deane said businesses that find some clients unprofitable under their new business models could pass them on to other firms which may be better equipped to service them.

He said: “I can see that some of the smaller businesses will look at the model that they are operating, whether it is a full advice model or something less, and consider whether the firm down the road would be better suited to some of the clients they have.

“We may move to a world where once people have defined their business model, they work in a collaborative process with other firms to make sure that clients who may not be profitable to them pass to another firm.”


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