Read My Lips
Yesterday’s Retail Distribution Review (RDR) debate arranged by Professional Adviser magazine identified the continuing myths that surround the RDR.
It at least gave me the opportunity to challenge some of the thinking around this subject.
The first myth, that however hard we try to dispel it keeps coming back, was that the RDR is about charging clients fees for advice.
Once and for all read my lips, no it is not.
I was able to point out that “adviser charging” still means that the IFA, if they so wish, can advise the client and only get paid if they decide to implement a product. If they offered a bundled service of advice and implementation they can still be paid through the product and in many ways this is the same as many IFAs do now where they have imposed their own limitation on the amount of commission payable.
For the sake of clarity the consumer will not have to write out a fee cheque in the vast majority of cases unless that is what they want to do.
The second myth that the debate picked up on was that the IFA is moving towards only helping the high net worth client.
The definition of high net worth from the Cap Gemini Merrill Lynch World Wealth survey of 2009 informs us that a high net worth person is one with US$1 million of money available to invest. That is about £650,000.
Frankly few IFAs deal exclusively with clients of this level of wealth.
The truth is that most IFAs are dealing with the mass market and will continue to do so in the future.
Certainly they will operate in different ways and as I said yesterday will find different mechanisms for delivery of advice. I suspect that the internet will start to come of age in facilitating not just information and guidance but also advice.
I was entertained as an old bloke (well aged 55 but that is quite old) that IFAs were going to struggle to get to QCF Level 4 qualifications because of their age. Nonsense!!
Age is no barrier to taking and passing these exams and to suggest otherwise is to be very unfair.
After all these IFAs have enormous amounts of experience which if we believe what we are told should count towards demonstrating expertise – well put simply exams are simply a test of expertise.
There is a price all IFAs have to pay to be able to claim the trust of the consumer and those who are RDR resistors are simply telling the consumer they don’t believe they are important enough that they should pay.