Scottish Life has warned that advisers need to be charging fees for at least 30 per cent of their business by the end of this year in order to be prepared for the 2012 advisercharging deadline.
Speaking at the Winchester White RDR conference at the Institute of Directors in London last week, chief executive John Deane told the delegates that firms need to start moving business from commission to fees immediately.
He said that by the end of 2010, firms should have at least 30 per cent of their business moved across to adviser-charging, with 50 per cent by the end of 2011, to achieve the shift in time to meet the deadline for the requirements of the retail distribution review.
He said: “Anyone who thinks they can switch from commission to fees overnight will go bust. Firms need to start the change now.”
The Ideas Lab director Roderic Rennison agrees that firms need to start thinking about how they will charge for their time, but adds that firms will move at different speeds in the lead-up to the 2012 deadline.
He says: “What matters is that advisers understand how to cost their time and implement adviser-charging. IFAs need to understand their proposition, recognise there is value in what they do that is worth charging a fee for and then they need to cost their time out so they know what amount to charge clients. Then they need to begin the process of working through their clients and explaining that they are moving to a fee basis.
“Using percentages of business as targets in the lead-up to the deadline may be useful but what matters more is understanding how to move to adviser-charging and making sure it reflects how individual intermediaries work. There are no one-size-fits-all solutions, firms will progress at different rates.”