By Ralph Tucker, Business development director, Mastek
Unless you have been populating another planet outside financial services you will not have failed to notice that the RDR deadline is fast approaching and all eyes are on the industry, questioning how it will manage in the post-RDR world. There has been much wailing and gnashing of teeth over (what is now) several years when it comes to its implementation and although some of the finer points of the regulation are still being ironed out it is apparent that the RDR is now inescapable. However, the RDR should not be greeted with sinking hearts and sighs. In fact rather than an annoyance that must be adhered to, it should be regarded as an opportunity for firms seeking to gain competitive advantage in the market. The seismic change here is that advisers will seek even more to develop long term relationships with their customers, who will select advisers based purely on the level of service they offer. For the first time, consumers will be explicitly paying for a service and relationship rather than a product. Therefore provider firms that up their game in the service stakes to reflect the new business demands being placed on intermediaries will reap the benefits, as service becomes the main differentiator - and therefore the new commission - in the world of advice. Trust and engagement will be the new currency advisers work in and, to cooperate with this, providers need to be fully aware that minimum compliance with the regulations is not enough. They too will need to offer superior service to advisers and customers in order to succeed.
Warnings need to be made salient that bad service will soon have the strength to take a product provider out of the market. Providers need up-to-date systems to provide a high level of service to their advisers otherwise the risk is that advisers and customers will look elsewhere for business.
To cater for this challenge, distributions and advice channels will have to become highly automated and volume orientated in order to compensate for lower potential margins on each client. As the post-RDR ‘new model advisers’ move upstream to focus on the potential value to be found amongst high net worth individuals, the other demographics will be largely catered for by restricted advice and direct to consumer models. It is these channels that have the potential to generate a massive volume of business and, with it, the opportunity for savvy organisations to cater for the increase in volume, but only if their systems and processes are adequately prepared beforehand.
The cost of not effectively supporting intermediary partners with up-to-date systems and a service that meets their needs has the potential to be very damaging, as quality service and efficiency will determine success in the new marketplace. Legacy systems will hamper performance and slow down customer service. Reputation is also going to become a vital tool in winning and retaining customers post-RDR and capable systems will make the reputation building process a lot smoother.
Providers should be aware of the software solutions available to help with these changes brought about by RDR. For example, Mastek’s Elixir for Retail Distribution (ERD) enables businesses to control agency agreements, support multi-channel distribution, manage internal sales teams and provides a platform for growth.
Those that are prepared to make the necessary change to systems, processes and technology in the correct way to improve their service offering will be the first in line to benefit from the potentially huge influx of business that the RDR will bring.
With Mastek’s ERD implementation timescales targeted at being just six months, it’s not too late to transform agency and remuneration systems before the December 2012 deadline – however time is fast running out. RDR is set to reinvent the way advisers work and demonstrate value to their customers. Mastek’s ERD solution will ensure systems are ready and waiting to meet the challenges of the post-RDR market, enabling providers to gain competitive advantage by providing a robust, comprehensive system to service the adviser market.
However, the worry is that this message is simply not being understood by many providers. Earlier this month Mastek launched a microsite to try and impress the importance of this on to those that have fallen behind with RDR preparation. We teamed up with Ian McKenna of the Finance & Technology Research Centre and IFA & Industry Commentator Peter Chadborn to offer a free RDR hub where the industry can come for a free systems health check with which firms can review their capacity to respond to requirements arising from the RDR. Based on the results of this, Mastek will perform an initial analysis and provide a free report to the company highlighting any shortcomings its systems have. This is our attempt to get the industry up to speed as the role we all play is set to change and the sooner we embrace these changes and prepare for them the sooner we all benefit.
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