F&C became the latest asset manager to declare its RDR intentions this week, predicting growth in both self-directed sales and multi-manager.
It is fair to say no one really knows the extent to which the RDR will ultimately reshape the retail landscape – ask 10 different experts and get 10 different answers, often coloured by the interests of their firm.
F&C says its research suggests both that more investors will want to self-direct their assets and that unbiased advice is one of the most important buyer considerations, articulating the often contradictory signals that firms are hearing in the marketplace.
Big investment firms, which rely so heavily in intermediated sales, are obviously nervous about the radical overhaul of the industry and how they may need to adapt.
We are unlikely to see a “big bang” change to the IFA sector come January 2013. The dramatic predictions often quoted by consultants at conferences are only ever a window into how advisers felt at a particular time – usually a number of years ago and with very different assumptions about the effects of the review.
However, it is good that asset managers are using the RDR as a trigger to take a long hard look into the mirror and decide what value they add to the end-consumer and where their efforts should be focused.
With the eurozone crisis set to cast a continued volatile shadow over markets and a combination of RDR charging changes and political attention putting pressure on charges, there is a lot to think about.
Margins will continue to be squeezed and tough decisions made about underperforming propositions which can no longer be carried. However, investors will continue to pay a premium price for premium products.
Arguments supporting D2C growth are seductive but some caution is advised. The sums involved in effectively marketing yourself can be huge while the assets achieved could well be less sticky.
The current regulatory set-up is already very attractive to execution-only propositions and may well become less so depending on the FSA’s final rules on platform payments.
There is a massive apathy in the UK on regular saving. How are you going to attract and retain the younger, accumulation phase investors that appear the target of such ventures?
As the industry evolves, the intermediary sector should continue to be a very cost-effective and attractive route to market for investment firms with a decent story to tell.