Retail Life and Pensions - Where we are now
For Retail Life and Pension providers the RDR has a huge impact on their future distribution, products, services and business model. Key proposals impacting your distribution model are:
- you will not have the option to pay adviser firms any commissions or other incentives (e.g. shares of product charges, or rewards for placing business through a platform).
- IFAs will have to charge the consumer a fee for their services, regardless of the particular product provider they recommend.
Options to explore
The RDR creates a world where products compete for IFA selection based on a criteria where payment from the provider does not feature. Questions to ask now are:
- Should you offer facilities for deducting adviser charges from investments?
- Should you let IFA firms make their own arrangements to collect charges and create commission free products?
- What can make your product range more attractive than your competitors (features, service and support aspects)?
- What other distribution options direct to the public could work (on line, non advised sales)?
Whatever route you take will involve re-engineering of systems and people to deliver your new proposition. Experience of past regulatory re-modelling of the distribution landscape suggests that major system changes and wholesale restructuring of the skills and knowledge of people takes twice as long as you expect. The FSA's timetable will not give the final certain picture until Q1 2010. Starting systems work without that final confirmation is a risk based decision; however the concept of advisers being truly independent and charging clients for advice has remained constant throughout the past 2 years of consultation.
What you can do now
Now is time for thinking, researching and planning.
Think creatively, your project teams need to develop new strategies for this new world
- Research the basis on which you can build a position of competitive strength with IFA's
- Carry out consumer research and product concept testing to inform your debate on the best way forward
- Consider the strategies your competitors may adopt and how you could respond
External facilitators can help your people develop their strategy, think through competitors likely moves and plan the tactical changes you need to make. They keep groups on course and focussed on objectives challenging them to move beyond conventional thinking.
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