Standard Life's first RDR propositions will be introduced from early Q4 giving advisers time to plan a smooth transition to adviser charging.
We'll give financial advisers extensive flexibility with a wide range of adviser charging options across our post-RDR product range.
We're also planning to introduce explicit charging structures on our key retail products - Active Money SIPP, Retail Portfolio Bond and FundZone - later this year. As part of these changes we'll start to pass the benefit of mutual fund manager rebates back to clients, in line with our Wrap proposition.
Adviser Charging
Our adviser charging options have been designed to help financial advisers manage charging and commission inflows, breaking it down into the relevant types of remuneration at client level. The model fits with an adviser's menu of charges. It offers options for initial, ad hoc and ongoing charges on either a flat or percentage of assets basis. On Standard Life Wrap, advisers will have the ability to set adviser charges at individual product level or across the whole portfolio, supporting a wide range of sophisticated adviser charging structures.
Graeme Bold, Director UK Retail RDR, said: "The introduction of adviser charging to replace commission on new business is the cornerstone of the FSA's RDR agenda. We've strongly believed in the need for the cost of advice to be transparent for a number of years and introduced customer agreed remuneration structures on our key retail products as early as 2004. We see the transition to adviser charging as a unique opportunity to send a signal of change to consumers, removing any perceived bias created by providers' influence over remuneration structures. It allows the amount, timing and funding of any adviser charges to be a matter purely for the adviser and their clients. As a result, advisers need the flexibility to charge clients for their services in a way that suits them both."
Inactive Products
To make sure we invest in areas that advisers and their clients value, we've taken the decision not to offer adviser charging on products where there's limited demand from advisers or clients. This includes many of our older products.
Supporting Advisers
We're urging advisers to start planning to make the move to adviser charging now to ensure clients are able to continue receiving valuable advice services and that advisers' remuneration is protected from unpredictable ‘advice events'. To help them do this we're preparing support to allow advisers to agree adviser charging terms in advance of our go-live date, which we can process once the new functionality is available in Q4.
Graeme Bold commented: "Many transactions have now been defined as ‘advice events', which will trigger the switch off of trail commission on legacy assets. So advisers need to get a plan in place now to ensure that their income stream is protected and they are able to continue to meet their clients' interests through provision of on-going advice. Where it makes sense to do so, transitioning clients onto adviser charging sooner rather than later is the best way to ensure this, and we are working with advisers to support them in this process."
Pricing
As RDR approaches we're now planning to make changes to our charging structures on our key retail products later this year - Active Money SIPP, Retail Portfolio Bond, and FundZone.
We'll update key retail product lines to pass the benefit of the mutual fund manager rebates we negotiate to clients, wherever our FundZone platform is used to administer the investments. Fund manager rebates on mutual funds allow us to use our buying power - our scale and access to successful advisers - to drive down the cost of investing in mutual funds. These rebates will be paid in the form of cash rebates into the relevant cash account.
On Wrap, we already pass the benefit of mutual fund manager rebates we negotiate to clients. We're not making any plans to change the charging structure until the regulator provides more clarity on platform charges and rebates.
.At the same time as passing back rebates to new mutual fund investors on SIPP, FundZone and Retail Portfolio Bond, we'll also introduce an explicit tax wrapper charge to cover our costs. Currently these costs are covered by the fund manager rebate which we'll start passing directly to these clients in the future.
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