Focus Solutions welcomes the RDR and believes it will bring much needed change to the industry to the benefit of the consumer

2 December 2008

Focus Solutions, the leading supplier of enterprise solutions to the financial services market, has welcomed the changes proposed by the Retail Distribution Review (“RDR”), and believes it will bring much needed change to the industry as well as address the broad spectrum of consumer financial needs.

The proposed distribution landscape from the RDR, which incorporates ‘independent advice’, ‘sales advice’, ‘guided sales’ and ‘execution only’, will drive a fee based model for independent financial advisers and a requirement to assume a higher level of professionalism. Chris Pitt, Lead Business Consultant at Focus believes this will redefine the role of the financial adviser to the benefit of the consumer: “Financial advisers will have to assess the service they are providing to their clients to ensure they are offering value for money for their fees. It will also mean that they will have to cover the full breadth of services and look to manage their clients’ financial lifecycle.”

Although this may provide challenges to IFAs, and indeed Focus predicts that the industry will see yet further consolidation in this area due to the new regulation, Pitt says this can only benefit their positioning in the market. “The requirements of the RDR mean that IFAs can achieve the same professional standing as other professions through the adoption of consistent, well regulated processes. This, in conjunction with a greater breadth of services, means IFAs will be better placed to address the needs of the UKs ‘wealthy’ individuals which is an ever growing market.”

Focus also believes that the RDR will encourage bancassurers and providers to develop new business to consumer channels to meet the needs of the mass market for whom it is not practical to pay IFAs’ fees but still require guidance for less complicated products. “Currently around 27 million people in the UK don’t seek any advice when considering financial products”, says Pitt. “It is this contingent that I believe will benefit most from the RDR and will start getting access to the necessary advice or guidance when making purchases.”

Overall Pitt sees the output of the RDR as positive for all parties. “The public will have a much clearer understanding of the options available to them when considering financial products and will have greater confidence in the system; the IFAs will adopt a more professional stance and will be well positioned to address the needs of high net worth individuals and for bancassurers and providers it will provide them with a great opportunity to address an under-served market through guided sale and sales advice business to consumer channels.”

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