On Tuesday, David Ferguson, founder and chief executive of Nucleus Financial Group in the UK, speaking at the Sanlam i3 Summit, said RDR and all the associated legislation introduced in the UK in 2012 have really been about driving value for money.
RiskSA reports on this as follows:
“The winners have been those who cared about clients intensely,” Ferguson pointed out. In fact, the biggest winners have been those businesses who moved to client centricity for commercial reasons even before RDR. “The biggest loser of RDR has been anything that’s commission-led.”
Asset managers also made the mistake of expecting RDR to be toothless for them, but when the rest of the value chain becomes incredibly transparent, the same pressure is applied to fund managers too. Current trends in the UK include the outsourcing of technical aspects, for example portfolio construction to third-party discretionary fund managers, and for planners to emphasise the client relationship and tracking the clients’ progress against their goals.
Moneyweb also published a very interesting article by Inge Lamprecht titled: RDR in the UK: The winners and losers.
“It was all about value for money really and anyone who didn’t get that or couldn’t bring themselves into that world was lost.”
The winners have been those stakeholders that built or rebuilt their businesses around the customer. This was easy for start-ups, but sometimes difficult for established groups. The regulatory change essentially meant that the game was up for anyone who didn’t have the customer’s interest at heart – whether it was platforms taking dirty margins, advisor networks funded by soft commissions from providers or product providers concealing charges in complex charging structures, he said.
“If it doesn’t work for the customer, it simply doesn’t work at all.”
But while much doom and gloom were predicted for the advisor market in the years leading up to RDR in the UK, the independent financial advisors and restricted advisors who have made it through this trip have also been “extraordinary winners”.
Other winners included open platforms that were not driven by kickbacks or commission from fund groups and passive funds.
Anyone who is concerned about the future of investment advice would be well advised to read the Moneyweb article.