Developing a Non-advised Proposition – Part 2


Last week, I looked at the “advice gap” and why providers will increasingly see this as an attractive channel to complement their intermediated strategy.

As we approach RDR, professional adviser firms are putting the finishing touches to their customer proposition and pricing. So what is the best way to service clients with simple needs or where the cost of giving advice is not covered by the fee collected?

It has always been true that advisers have provided advice to clients where the commission does not cover the cost of the advice. Does this make sense in the future? Some advisers will set out a minimum fee for their service and some will set out a minimum investment before they will provide advice.

Developing a non-advised proposition


As RDR has developed, learned commentators have predicted that there would an advice gap, created by IFAs moving upmarket. Many also predicted that this would see the return of the insurance company direct salesforce.

But so far, this simply has not happened. The Man from the Pru has re-appeared but only to service the orphan clients from the original salesforce. As I write this article, I see little likelihood that any insurer will take the risk of launching and then managing any kind of advised distribution channel. I say this for two main reasons; firstly that they lack the risk appetite for giving advice and secondly, that they also see that the economics of a single tie focused on lower value clients cannot ever be positive.

No, to a man, they are putting their faith in three solutions:

Helping to build businesses – it makes Sense


Here at Sense we love to recruit a new member of the Network. Unlike many Networks, we take the time to get to know our new members and we like to feel they’re part of the family from day one. But is recruiting new members profitable for us? Is it viable as a short term business model? The answer is simple – and as you might guess, the answer is ‘no.’

That’s a parallel with most IFA businesses. Unless it’s a very big case, I doubt that many IFAs ‘make a profit’ the first time they recommend a product to a client. Fact-finding, compliance and back office work all have to be done and they all have cost implications.

Why Sense is staying independent


Sometimes it is difficult to predict how a fundamental change will play out and the debate over independence versus restricted is a classic example.

Every week, there is a new survey predicting the opposite of what we read the week before, so who to believe and what are the real issues involved?

Herding Cats


Just how do you get a few hundred self-employed IFAs to do the same thing? This is the conundrum facing the traditional national IFA model in which advisers have been given, over the years, freedom to express themselves in choosing investment vehicles. And it’s a big one.

Fighting on the beaches


As an avid student of history, I have often wondered what it was like to live through the Second World War. From the despair of defeat in 1940, through years of changing fortunes to the final triumph of victory and the hope of reaping the prize of a better world. Six years in which the old order was swept away to be replaced by a new set of realities, challenges and threats.

When Calum McCarthy fired the first shots of the RDR at Gleneagles back in 2005, who could have predicted that 7 years later we would still be waiting for the end? And, in many ways, RDR has felt like a war.

FCA, The Blonde Bond?


With most people’s focus being on RDR it has been easy to overlook the fact that 2013 brings a new regulator.

As in the past, the transition between regulators will look and feel a little like when we are introduced to a new James Bond. You know what it’s like. You have got used to the old one, the style of humour, the action scenes, and the way he looks and then they announce that there is to be a replacement. You know that there will still be glamorous locations, intrigue, action, romance and ultimate triumph over adversity resulting in our fundamental way of life being saved from the ravages of an evil despot, but you are going to have to get used to a new face.

Why Sense rejects multi-ties


2012 will once again be the year of the multi-tie. At least that is what the big old Networks want you to believe. Rather than spend their time thinking about how they can help their advisers to maintain independence, they have been trotting around to the product providers with their begging bowls, peddling the story that IFA status will be too hard and that, in return for a big cheque, they can help the provider corral advisers into a new multi-tie.

How RDR will affect the value of your business


RDR is clearly going to see many IFAs facing challenges they don’t want to face: exams to pass, a new compliance regime, individual contracts to complete with all their clients…

More than a few IFAs will say, ‘enough’s enough.’ Advisers who’ve been in the business a long time – who many of us regard as personal friends – are deciding to retire early because of RDR. And others are simply deciding that now might be a good time to sell their practice and hopefully collect the proverbial ‘pot of gold.’

The future of networks – much more than just a number


“…So we’ll take care of your compliance and get you the best rates on commission.”

“Sounds good to me.”

“Great. Sign here. You’re member no. 3,857. What was your name again?”

Alright, maybe it’s a bit harsh – but that was how far too many IFAs saw the Network they’d joined. An e-mail every week with the latest commission rates, one in December informing them that charges were going up (again) and a once-a-year compliance visit that had them checking files into the wee small hours.