Has The Money Portal answered one of the FSA’s RDR questions – the vexed issue of how to cut out churn? Messrs Craven, Easter and Pearson certainly believe that they have.
The system they have launched this week at the Sage network conference in Spain rewards advisers looking to sell on their business based on a number of factors but if things work as TMP says it does seem to ensure the quality of that business.
To get this quality, it considers many emminently sensible issues such as quality of data. It of course also based amount of business done.
But the ‘What If’ system will allow advisers to keep a running total of what their business may be worth to sell on to TMP when they decide to retire or indeed start a second career.
Based on what seems to be a logical position that they will be buying better books of business as a result, TMP says it will be offering as much as six times annual income in a practice buyout after a minimum of three years.
It actively marks down moves between products such as onshore bonds and rewards business that stick as well as business done on a trail or fee basis. The Sage advisers can switch this business but it will be on the basis of detailed discussions with TMP about the reasons for doing so.
If this works then it should disincentivise churn and incentivise a more sustainable business model for the IFA, answer many of the worries providers have about losing business at the end of any clawback period, and help TMP too.
Clearly this is early days and no-one is saying Alan Easter and his colleagues have found the holy grail yet.
It will form part of TMP’s RDR submission.
But it could be the answer to the big question the FSA was really asking – i.e. how to make sure the interests of providers, advisers and clients are not just aligned but seen to be aligned.
Rival networks and nationals will of course want to see the details of what is on offer. They may say this system is a little to good to be true. But as TMP are submitting it to the regulator they must be pretty sure of their case.
It is a challenge to the Sesames, Thincs and Tenets of the world, and arguably the mighty Positive Solutions too.
Maybe an industry led solution isn’t as mythical as we thought.