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Ian McKenna: Transact keeps its sights on the moving target

Ian McKenna says Transact is looking to shift with the RDR changes to help advisers. (See right column for other RDR preparation assessments).

One of the challenges of launching a truly innovative idea is that, sooner or later, everyone else realises how good it is and copies you. Something that might have been your unique selling proposition suddenly becomes commonplace and you need to find other ways to differentiate yourself.

Skandia suffered this same problem as open architecture became the norm over the past decade and a half and Transact, the original wrap platform, has had to contend with an ever increasing crowd of new entrants seeking to emulate its innovation.

Anyone who has spent time speaking to advisers who use Transact will be aware they are often passionate in their support for the organisation and the company’s consistently high scores in service ratings must be the envy of many bigger organisations.

Achieving such support among an adviser community that has more than its fair share of cynics says a lot about the levels of service it provides.

It is typical of Transact’s impartial approach that its effort in assisting adviser firms to achieve RDR transition has concentrated on supporting the activities of others, for example, as the lead sponsor of the IFP’s recent Financial Planning Day 2012 and other regional IFP events, rather than running its own branded activity.

Head of marketing Malcolm Murray sees the use of wrap platforms as crucial to the provision of financial planning under the RDR, identifying a platform’s ability to integrate clients into a single proposition as crucial to providing the flexibility needed to deliver optimal planning solutions.

As an example, he says retirement will evolve into a process whereby people will choose to work less rather than ceasing all employment on a given date.

With this in mind, Murray suggests the best planning solution for clients could involve taking capital gains, withdrawing income or assets from Isas or tax-free withdrawals from bonds at different times to meet their income needs.

He believes a wrap platform is uniquely capable of providing the right holistic approach to managing a client’s investments to optimise complex planning issues in the future.

He also says the platform is capable of facilitating the payment of the adviser, although this is presented as an incidental benefit with the focus on the benefits for the customer.

He recognises that while all that Transact has been doing for the past 12 years has been RDR-friendly, the company is not complacent about the challenges it and other organisations face in being ready for the RDR.

The company believes much of its key activity in the coming months must focus on helping advisers understand the FSA’s thinking and how this is subtly shifting over time.
The regulatory perspective on the use of a single platform is cited as an example of how the regulator’s emphasis has changed, with the most recent suggestion being that the FSA has not ruled out using a single platform to meet the needs of all an adviser’s customers but is certainly sceptical of this approach.

Murray says some firms, especially those who have been using full wraps for some time, have evolved their proposition so it is virtually built around the platform.

The company has strong views on the debate on independence, saying it should be recognised there is a difference between the restricted proposition operated by organisations such as St James’s Place, where there is tight control over products, and adviser firms that seem increasingly likely to opt for a restricted designation for fear of breaching a future review of meeting independence tests, as there is a lack of absolute certainty in the statements being made by the FSA.

On the subject of how its service will evolve to meet the challenge of the RDR, although it will not be drawn on precise details, Murray is happy to confirm that while Transact has already reduced its charges in recent years, it has service developments in place for later this year that will not incur any additional charges but will considerably reduce the time spent by advisers on admin.

He says all Transact’s products are already visible online but a service that is being piloted among a selection of advisers which makes most information accessible within seconds via a new dashboard will launch to all advisers in May.

With less than seven months left under the old regime, Transact recognises that much of its job in the coming months will be to make clear to advisers that its wrap can be used to deliver what is needed to comply with the RDR.

Transact sees an increasing burden on IFAs as firms must decide how they will meet the ongoing requirements for assessing suitability, avoid conflict of interests and deliver fair treatment of customers.

Murray is adamant that Transact has the full range of services necessary for an adviser to meet the regulatory demands and sees the challenge in the remaining months to help advisers make genuinely balanced decisions on how they can use Transact’s services.

Ian McKenna is director of the Finance & Technology Research Centre


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There is one comment at the moment, we would love to hear your opinion too.

  1. This might sound really weird, but by calling your firm “Independant”, you may be imposing more restrictions, taking more risk as a firm and having FSA restrictions on your decision making processes than if you describe yourself as Restricted post Jan 2013.

    We use Transact, Skandia/Selestia, Cofunds, Fidelity Funsnetwork and Std Life Fundzone for exisitng clients, but don’t place new clients on all of them. This restriction is simply because we can’t keep current with how the different back office systems work otherwise. That is a restriction. If a client wishes us to place them on a different one, we will do so, but it will cost extra, not for teh advice, but gfor the admin involved in getting used to or working with clients across an extra platform or wrap.

    You can be Independant, but describe yourself as “Restricted”, you cannot be the reverse, so why would you want to describe yourself as Independant post 2013 with all the inherent risk of doing so, when you can describe yourself as restircted and then open doors based on what the client wants to pay you to do?

    Your Client Agreement can state the nature of your restrictions and explain the cost of your advice based on that and then give the client the option of you removing those restrictions, for which additional reserach (hence cost) is neccessary.

    PI should then reflect the amount of business you do with and without restrictions.

    Independant Advice decision by the adviser is dead, long live independant advice decided upon by the client.

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