The retail distribution review caused us to take a serious look at our business model 12 months ago and make
the necessary changes.
For many years, we have concentrated on building recurring income through retainers and fund-based renewal commission, taking lower initial fees/commission. We instigated annual client reviews a while back and upped our recurring income from 0.5 per cent to 1 per cent a year as a result. We ended work in non-specialist areas such as
mortgages, general insurance and protection and became investment specialists.
Where we had dabbled with wraps in the past, we decided to seriously embrace them 18 months ago. We introduced a highly automated assetallocation investment manage – ment system and we email a quarterly report to all wrap clients with switch recomm – endations. Client instructions to switch are made online and annual face-to-face reviews are now optional. We charge fees for our work, which can be paid to us directly by the client or via the account.
We became licensees of a specialist trust company last year and affiliates of a willwriting company. This has added a lucrative extra level of fees and also improved the quality of our work for clients. We invested in pensionswitching report software for money-purchase pension schemes, allowing us to produce high-quality pension reports time- and cost-efficiently. We already subcontract final-salary pension reports to a specialist.
Again, while we had only dabbled with lifetime cashflow software in the past, we are about to invest in specialist standalone software not linked to a back-office system.
As a result of all these changes to our business proposition. I am more excited about our future than ever before.
There is a lot of fear about the RDR but I positively welcome it. I might add that I am one of the fortunate ones who already has the necessary qualifications to meet the requirements.
There are various estimates as to how many IFAs will quit the industry. Assuming it is a third, that is great news for those who survive RDR implementation in 2012 as there will be more business for the rest of us.
Without a doubt, the last two years have been tough in our business. However, I believe that professional IFAs who embrace the changes imposed by the RDR will thrive. Roll on the dawn of the new-age IFA.
Tony Byrne is financial planning director of Wealth and Tax Management