When the starting guns were fired on both the Olympics (in 2005) and the RDR (in 2006, with the Callum McCarthy ‘call to arms’), both ‘events’ had seven years to get it right, and to consider what legacy they wanted to leave for the future.
I looked at the time to prepare, who would enter which race, and then the legacy. After the talk - which received good feedback (and a few laughs) from the audience - I was surprised to see that I got at least two mentions on industry websites in the ‘who could make the most tenuous link to the Olympics’ category.
Now, never being one to miss an opportunity to stretch a metaphor to breaking point, I thought there might be just one more article in it.
As the Olympics fade into memory, the general consensus will be that it was a success. The participants used the preparation period well so that they reached the event at their peak, and the organisers got it right. As a result, the legacy is looking positive.
So, how do we now compare this with RDR?
Almost every week we have a new report or piece of research suggesting that most advisers are ready, or that most advisers are not ready, or that the issue of SPSs will be delayed.
It is difficult to get a clear picture of the true situation, but I would guess that most advisers will be where they want to be by the turn of the year, with their exams done and their SPS on the wall.
From the provider perspective the story is very similar. Barely a day goes by without one or more providers publishing their new pricing structure alongside how they will deal with adviser charging and legacy business.
As well as being ready on a personal basis, providers and advisers will need to have their business strategies up and running too.
One of the most important areas of preparation is choosing the right race. In the run-up to RDR we have seen a number of providers moving away from being jacks of all trades, to being specialists and choosing the particular race in which they want to compete – whether that be retirement or protection, workplace pensions or wealth management, annuities or healthcare.
Although there will be more specialism, it is likely that the companies that survive will be those with scale, a strong brand, and an offer that delivers customer value and simplicity.
Specialism requires companies to match the right channels to the right customers. It is a fact that many of the life companies of old are facing increasing competition from the ‘new kids on the block’ who are, in many ways, better able to flex and adapt to dramatic shifts in the consumer landscape.
For advisers, the right race seems to be the hurdles, as they have to get past various obstacles!
The first hurdle may well be one of status - independent or restricted - and the practical differences between the two. In addition to this will be the consideration of a customer proposition, customer segmentation, and a smooth transition from commission to fees.
For me, the latter is the most time-critical. Many advisers will already have either partially or totally moved across to fees, but the transition will involve a lot of factors, including cash flow, billing systems, new customer agreements and even a process for recovering fees in the event of non payment. First and foremost for me, however, is the process of setting a charging structure for work done that is competitive, but that makes the requisite level of profit.
Obviously the FSA is in the middle of the action, and whilst there are still a few ‘big’ subjects that appear to be causing problems - such as adviser charging and relationships with discretionary fund managers - it has produced some helpful leaflets like ‘Make sure you’re on track for the RDR’.
So, that leaves us with the legacy.
Our legacy will, I think, be twofold. Firstly, the factual bit - that what emerges in 2013 is workable and creates a more efficient, credible industry. More importantly though, I think our legacy will be judged by our customers, and whether they understand the value of good financial advice and are prepared to pay for it.
Unlike the Olympics, there is no set finishing line with the RDR – the race goes on and there will always be new heats to contest 2013 – let’s make it our personal best!
Mike Morrison - Head of Platform Marketing, AJ Bell