It’s not just the Olympic clock that is ticking, writes David Hesketh, group M&A manager, Perspective Financial Group Ltd
You can’t seem to move at the moment without encountering countdown clocks ticking off the days until the Olympics and the ‘100 to go’ milestone was passed recently. Away from sporting festivals, advisers of course have deadlines of their own and a significant landmark was reached at the end of April with the ‘250 days to go’ until full RDR implementation marker reached. The Association of Independent Financial Advisers (AIFA) commissioned research to coincide with this signpost and the results showed encouraging levels of readiness in the main.
Three-quarters of adviser firms had reviewed their business models and believed they were already prepared for RDR or would be in advance of the end-of-year deadline. A further 12% had undertaken such appraisals, but were yet to implement the required compliance changes. This means that 87% of advisers have either made the necessary adaptations or at least identified what needs updating which I suppose is a satisfactory percentage at this stage of proceedings, but we mustn’t forget about the remaining 13%.
According to AIFA, this is made up of 7% of firms who have yet to review their business model and 6% who did not know their firm’s level of preparedness. Whether firms in the last sub-section are waiting for some sort of fairy godmother to sweep in and make the necessary decisions for them is unclear, but it is to be hoped for their clients’ sake that they start showing more urgency.
Further evidence that the majority of advisers are aware of the deadline’s proximity is the increase in the number of firms attaining chartered status. The Chartered Insurance Institute (CII) recently revealed the number of member firms which have achieved this has more than doubled since 2008, when there were 191 such companies. In the run-up to RDR, this figure has increased to 403. The number of chartered financial planners has also shown a similar expansion over the same time frame, with the current figure standing at 2,839. As a group we are very much focused on the achievement of Chartered status – we already have five offices achieving this and our aim is that all offices will have this accolade by 2014.
The AIFA and CII findings certainly paint a rather more positive picture of our industry than some might have imagined and we can start to see the direction that advisers themselves want to help move it in. Firstly, it is positive that adviser firms are aware of how the whole advice process is about to change and how they are striving to make the necessary amendments to their business models and, secondly, that they are serious about raising the profile of their profession in the eyes of the public. We believe the chartered approach is the right approach, as anything that can help improve the standards we all operate by can only help to benefit the most important stakeholder of all, the customer.
While to some the countdown clock represents nothing more than an interesting vignette to fill some column inches, as the number shrinks it should help to sharpen the focus of all adviser firms whether they think they are RDR-ready or not.
Those who have yet to reach a decision about their business model should consider whether the fact they already find themselves in a 25% minority may mean they need a little assistance in getting over the line. Admitting this is by no means a failure and even the most efficient organisations are able to identify where they may be better off seeking support. Perspective is just one example of a national advisory group that provides extensive regulatory support and we are always looking to discuss future plans with profitable advisory practices, who may just need more significant support and backing to help get them RDR-ready.
There are always options available even at this late stage in proceedings. However, real progress will only be made when a firm reaches a decision about how they want to move forward, the direction they want to travel and how they are going to get there. Until that point, those who might be able to help will not be in the picture. This is truly a time when putting off a decision is not an option.