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Future of supermarkets post-2012

It is interesting and indeed surprising to note how little attention appears to be given to the impact that the RDR proposals will have on investment platforms and their ability to continue to be of much use to investment professionals after 2012.

Without considerable enhancements and the associated costs this implies, I would suggest that we may well witness the demise of some current offerings.

Under RDR, a key tenet for product providers and adviser charging is transparency, so that clients have a clear appreciation of the costs associated with their investments. There is a determination to break the traditional practice of providers and advisers agreeing remuneration, whilst in reality it is the investor who is funding such payments. For this objective to be achieved, the current practice of fund managers passing rebates to supermarkets without the investor having any knowledge of the arrangement will have to cease.

For advisers seeking to retain their independent status beyond 2012, there will be a requirement to offer their clients a full range of investment options, including ETFs and alternative investments. This again poses a serious problem for existing supermarkets, as they will either have to adapt or cease to be of much use to investment professionals. Additionally, re registration of existing holdings will become mandatory across the market after 2012. This is currently a major hurdle for advisers and their clients to overcome, as the issue continues to be fudged by providers. Again, much of this is due to the constraints of existing systems, and the facilitation of such practices again implies significant costs for the supermarkets.

In conclusion, I believe that advisers need to give serious thought as to their selection and support of existing platforms, as not all may be viable or available beyond 2012. For anybody involved in running an advisory business, this is an issue that needs to be addressed.

Ken Taylor is director of Mackenzie Taylor Wealth Management

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