31st May 2011

Aegon: Everyone has to buy into the vision

I was in Cardiff recently and had a very productive breakfast meeting with a diverse group of business owners. My task was to give an update on RDR and to highlight the tools available for a successful transition.

I had prepared a presentation and handouts and was looking forward to going over them but as successful as the meeting was I hardly used any of my slides. This was because all anyone wanted to talk about was how they could get the advisers in their business to begin charging fees, retainers, and grasp the rules around adviser charging and the consultancy charge.

These business owners have accepted the need for a client centric service proposition with a transparent pricing model. They also know that within this model their business has to have the flexibility to ensure that various remuneration options are utilised depending on the vision of the business and the preference and circumstances of the client.

This is vital given the recent launch of the new FSA Consultative Paper 11/8

This outlines that Retail investment advisers will have to breakdown their advising charging structure to notify the FSA whether the firm is providing independent or restricted advice, initial or ongoing advice, and whether payment is collected directly from clients, via product providers or via platforms.

Consultancy charges relating to group personal pension schemes, group self-invested personal pensions and group stakeholder pension schemes will also be subject to the new proposals.

But mortgage brokers and protection advisers, or non-investment advisers, will not come under the proposals.

At a strategic level, each of the businesses I was talking to are on what I would deem the right track. Their big problem was that operationally their RIs, many of whom are self-employed, are at a different stage of the RDR transition journey.

This will present two problems that will need solved. Each firm will need to:

• Meet the needs of CP11/8
• Ensure that they are providing a consistent level of service to clients and that the appropriate remuneration method is selected at a fair level.

Every firm will have to ensure that the business vision, client segmentation model and service proposition matrix is understood, accepted communicated and championed by all its advisers, Para planners and to be honest everyone connected to their business including clients.  

Otherwise, they risk having a top-level strategic vision with its service proposition determined by appropriate segmentation, which falls flat because those that will have to implement it do not understand it and are unaware of all the remuneration options that are available in a post RDR world.

After speaking to many advisers, we have put together a whole zone dedicated to helping advisers understand the various types of remuneration options available on our RDR business transition website the business brain at www.aegonse.co.uk/businessbrain

I would advise everyone to fully digest CP11/8 and ensure everyone in your business understands and is confident of all the remuneration options available to support your post RDR business model.

John Joe McGinley Business Consultancy Manager Aegon May 2011

Investments