The issue of who should bear the burden of educating consumers about the RDR is fast becoming one of the most hotly debated topics of the year.
There has certainly been enough research carried out to conclude that many advisers believe that the FSA and/or government should take on this responsibility, but is it really right for the industry to look to a regulatory body like the FSA to lead this work? Also, what role should there be for organisations like the Money Advice Service?
The timing of communication to consumers is also likely to be a key issue, with the question being how far ahead of R-Day should any communication begin?
My view is that if messages were sent out now, by January 1, 2013, most consumers will have forgotten the detail or even the messages entirely, so that’s why we believe that the best time to undertake any broad consumer education would be later this year and for it to continue into Q1 and possibly Q2 next year, as it’s important to recognise that, for a typical customer, R-day is not directly relevant. The first time post R-day that they engage with their adviser is the key date when the impact of RDR will be tangible to them.
But the point that I feel is most significant when it comes to the debate about communication to consumers is for the industry, and specifically advisers, to be careful about what they wish for in this area. Does an adviser really want their client to hear about the ins and outs of the RDR from a regulator? Does this put the adviser on the front or back foot? I think when advisers think this through most are likely to want their clients to hear about RDR from them, and for it to happen at the same time as the conversation about how they propose to work together in the future. This approach will help put the adviser on the front foot with their client, and to build stronger and longer relationships.
Russell Warwick is distribution change director at Prudential