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IFAs uncertain on cost of RDR, says Aifa

One in five IFA firms do not know what financial impact the RDR will have on their firms and 10 percent say the transition won’t be complete until beyond 2012, according to Aifa.

Research conducted by NMG amongst 140 firms reveals that 20 per cent cannot estimate the financial impact of the RDR transition upon their businesses.

Of those that gave an estimate cost, 9 per cent believe there will be no cost to the business, while 10 per cent believe the costs will be over £10,000 per registered individual.

Despite uncertainty Aifa says almost half of IFA firms are currently investing between one and five hours each week into their transition, 18 per cent are investing between six and ten hours and 6 per cent are investing over ten hours.

However, more than half believe their firms won’t be RDR ready until the end of 2012 and 10 per cent say that transition won’t be complete until beyond 2012

The research follows the recent launch of AIFA’s online business academy, supported by Skandia, which was set up to help IFAs meet the demands of the RDR.

Aifa director general Chris Cummings says: “The FSA’s cost benefit analysis of the RDR stated the cost to the IFA profession to reach compliance would be £430m. Irrespective of IFA estimates, what is clear is that costs borne by firms will be significant. The additional costs, both monetary and time, required to fulfill the RDR requirements are substantial and should not be underestimated.

“However, I am encouraged because, as a profession, we are stepping up to the challenge presented by the RDR. IFA firms around the UK are rolling up their sleeves and getting on with the task of changing their organisations to ensure they are ready. There also appears to be a realistic sense of how long this process is going to take, with nearly two thirds of firms estimating that the project will take over 18 months to complete transition.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. IFA’s Uncertain on cost of RDR
    I have commented on these News Updates several times before and have welcomed the help we have been able to provide the IFA Fiirms that have got in touch.

    In our opinion the whole RDR project is a now “au fait accompli” -sorry guys that French – It’s all to late to do much about it.

    On the positive side it gives us all an opportunity to prove what we know, by passing a few exams.

    To review our customer bases and get rid of the 80 from the 80/20 rule.

    Sort out our Websites and get in place a decent Marketing Strategy, along with looking at all of our processes to adapt and grow, using less and less time to do the same, even outsourcing some work to reduce cost’s and increase efficiency.

    I wonder why we did’nt do this five or even 6 years ago?

    All you need to do is adapt, simple really.

    I can assure you all reading this if you take on board some of the tools and help out there your business will start to fly.

    Promise.

    Richard Smith
    http://www.theinternetconsultancy.com
    (Oh and IFA’s).

  2. David Jeremy MCII MCMI 10th August 2009 at 2:53 pm

    RDR costs versus benefits
    As a “retired” Financial Adviser (if that is possible!) I nolnger have any interest in being FSA authorised. The industry brought the current situation upon itself due the the incredibly stupid and greedy practice swhich were the norm when I “joined” the “industry, in march 1984,at the end of Tax Relief for Life Assurance.

    After 30 years in the Army, I found myself wrestling with the very attitudes which led the Armed Forces , for the most part, to completely ignore the Financial Salesmen of the times. Our major Company virtually invented Financial Planning and the Fact Find. The costs were high and the profits slow to arrive.

    IFA’s will recoup the costs of RDR ? The client.
    How many Advisers will there be? Too few.
    Will the public be better advised? No.

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