What do clients think of RDR?

How much money has been spent on RDR, I wonder?

When you add together the budget of the FSA, the money we advisers have had to pay the CII and others, and the man hours that can’t be charged to clients, I suspect the total bill will be many multi millions.

Now, don’t get me wrong, I am a fan of compliance, in general terms.  I’m old enough to know people who remember when building society managers would sell endowments and get paid commission on the side, total non regulation.  But the pendulum has been swinging only one way for a long time now.

So what do clients think of RDR and all the changes?  They, after all, are the ones that regulation is trying to protect.

We sent out an email to all our clients.  We do this every year to announce changes in fees, and issue a new terms of business.

This year, driven by RDR, we had to send out a lengthy covering email to explain a few things.  Our client agreement has changed completely, a new keyfacts document, an explanation of how deregistering for VAT will affect clients, and so on.  This was the big test, what would clients make of it all, what questions might they have.  How would they react to all these changes that have cost so much time, energy and money.

We’ve had 3 responses so far.  One said “Fair enough.” One asked us to go and see the client to agree fees for the coming year, which I see as a good thing to do.

But my favourite response was from a long standing client, and friend, who took the time and trouble to email me.  He sent just one word:

“Whatever.”

Now, I’d like to think that we’ve had so little response from clients because we’ve always worked in line with RDR principles.  Maybe RDR wasn’t really aimed at firms like ours.  And yet it still affected us, and our clients, enormously, if not just because of the fees we have to charge the client in order to pass that money over to the regulator, ombudsman and compensation schemes.

As some clever French dude once said: The more things change, the more it stays the same.

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10 thoughts on “What do clients think of RDR?

  • “Whatever”. Love it. However, I suspect the IFA twitterati and posters on Adviser Lounge’s magnificent organ are not necessarily representative of advisers as a whole…can’t help but think there will be some clients of some advisers who will instead be saying “ARRRRRGH”. As my old Gran used to say, “as ye sow, so shall ye reap.”

    Reply
  • Why did you de-register for VAT, Chris? My understanding of your business is that you’d operated a purely time-cost planning model for some time? Is it because you’re now doing more ‘financial intermediation’?

    Reply
    • Whether you are charging by time or commission is irrelevant, it is whether you are engaged in a process that leads to intermediation of a product. Given that all of our clients have investments that we manage, we can argue that almost everything we do leads to intermediation of a product, and therefore (almost) none of our charges to clients should attract VAT.

      Hope this helps, feel free to call me if you’d like to talk it through.

      Reply
  • Only two points to make. Heard from a couple of company wallahs this week in response to my general enquiry as what the mood of the market in Edinburgh was;

    IFA 1 “…Not doing much as getting my head around this RDR thing”

    IFA2 “…Not doing much as I’m working on my client proposition”

    Another classic industry case of just getting over the line and worrying about the real issues too late.

    Reply
  • “I’m old enough to know people who remember when building society managers would sell endowments and get paid commission on the side, total non regulation” – Keny at XYZ Building Society, Hamilton used to go in the back room with Arthur of AB Life and large wodges of dough would allegedly go from Arthur (who coincidentally wore a wig or 3) into Kenny the Assistant Manager’s ‘sky rocket’ – and I wondered what I was told ‘next case to the AB Life’s Iain’!!!! That is investment panels for you!
    Will anyone be RDR ready? We are nearly but never satisfied with service proposition so like most ‘never’.
    The clients don’t care how they pay as long as they receive value.
    ps Kenny never did give me a cut as he was always on holiday!

    Reply
  • Why did you de-register for VAT, Chris? My understanding of your business is that you’d operated a purely time-cost planning model for some time? Is it because you’re now doing more ‘financial intermediation’?

    Reply
    • Whether you are charging by time or commission is irrelevant, it is whether you are engaged in a process that leads to intermediation of a product. Given that all of our clients have investments that we manage, we can argue that almost everything we do leads to intermediation of a product, and therefore (almost) none of our charges to clients should attract VAT.

      Hope this helps, feel free to call me if you’d like to talk it through.

      Reply
  • “Whatever”. Love it. However, I suspect the IFA twitterati and posters on Adviser Lounge’s magnificent organ are not necessarily representative of advisers as a whole…can’t help but think there will be some clients of some advisers who will instead be saying “ARRRRRGH”. As my old Gran used to say, “as ye sow, so shall ye reap.”

    Reply
  • “I’m old enough to know people who remember when building society managers would sell endowments and get paid commission on the side, total non regulation” – Keny at XYZ Building Society, Hamilton used to go in the back room with Arthur of AB Life and large wodges of dough would allegedly go from Arthur (who coincidentally wore a wig or 3) into Kenny the Assistant Manager’s ‘sky rocket’ – and I wondered what I was told ‘next case to the AB Life’s Iain’!!!! That is investment panels for you!
    Will anyone be RDR ready? We are nearly but never satisfied with service proposition so like most ‘never’.
    The clients don’t care how they pay as long as they receive value.
    ps Kenny never did give me a cut as he was always on holiday!

    Reply
  • Only two points to make. Heard from a couple of company wallahs this week in response to my general enquiry as what the mood of the market in Edinburgh was;

    IFA 1 “…Not doing much as getting my head around this RDR thing”

    IFA2 “…Not doing much as I’m working on my client proposition”

    Another classic industry case of just getting over the line and worrying about the real issues too late.

    Reply

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