FSA abolishes the RDR

I bet that got your attention!

Actually they haven’t at all but if you do bother to read the rest of this article can I ask you to consider what you would do if they did abolish it?

Would you crack open a pre-Christmas bottle of Champagne and celebrate?

Or would you think to yourself “so what”?

I hope that you find yourself in the second category because quite frankly the RDR should by now be an irrelevancy for just about any IFA who expects to continue post December 2012.

Think of what you are now going through not as something being forced upon you by a regulator but instead a very sensible approach to re-engineering your business.

If you agree that one of the best ways to murder your business is simply not to evolve it, then you can safely ignore the RDR because you are probably already making the necessary business changes.

It seems to me that all of the things that we have done as a result of getting ready for the RDR we did simply because we saw such changes as being in the interest of our clients, our staff and indeed ourselves as business owners.

We started to change in the summer of 2004 some two years before the RDR was announced by the FSA and everything that we have changed in our business model fortunately turns out to have followed the RDR route.

It is of course much easier to change if you feel that you are in control of that change. If you feel that it is being forced upon you then you are likely to be change resistant unless some one convinces you that it is in your interest to make that change.

It does seem as if there are really two reasons why an adviser might resist the RDR.

They do not believe that they need higher examination passes and/or they do not believe that commission should be abolished.

Consumers we are told do not value qualifications. I find that very strange although I agree they do not if you do not explain to them what the value is.

We have always held it true that it is the combination of tested knowledge through relevant qualifications, applied with skill based on relevant experience that makes for the competent adviser.

Adviser charging replaces commission; it is simple as that – or possibly not.

If there is a problem area in the abolition of commission it is probably in the “accumulation” area. Regular savings and investments do lend themselves to a commission based approach and I am sure that the regulator could have come up with a better solution than a blanket ban on commission.

For example just having a commonly agreed “factor” would solve any elements of product and provider bias. (I know the OFT won’t allow it because it is “anti-competitive” but it does seem that the problem of abolition is likely to be greater than the problem it seeks to solve).

So every business change that the IFA needs to make should be seen in the light of improving delivery to the consumer and generating greater efficiencies and effectiveness in the business which ultimately will lead to greater profits.

The FSA is not abolishing the RDR but for many IFAs that no longer matters.