Personal Touch's Ruddick on preparing for RDR

John Ruddick, director of IFA services at Personal Touch, gives a snapshot of how the firm is preparing for 2012 and beyond.

Putting into practice the recommendations of the retail distribution review (RDR) will involve a major shift in both attitude and working practices across the advisory landscape. While most IFAs recognise the importance and benefits of its aims to increase clarity, reduce the customer risks involved with commission-based sales and  improve professional standards, it can be difficult to establish what precisely needs to be done to achieve these aims and satisfy clients and the regulator.

As part of the RDR, the FSA has placed great emphasis on reaching a higher level of ongoing service provided to the consumer by the adviser. If the adviser is charging an ongoing fee or trail commission, then the interaction can no longer terminate at the point of sale. This requirement to improve communication with clients has the potential to be one of the most challenging aspects of the review, both logistically and in terms of assessing the level and type of communication that will be appropriate.

Ongoing service

In preparation for the RDR, IFAs will need to define what the components of this ongoing service might be. This is unlikely to be a convenient, one size fits all solution – different clients will have different needs, and so will require different levels of service. Then, following a rigorous process of client segmentation, advisers will need to work out how they can deliver the relevant service as effectively and efficiently as possible.

Carrying out this process by hand, for every client, would be an onerous task, allowing new technology to play a major part in the process. It will be particularly useful when it comes to relieving the time pressures that would otherwise be placed on IFAs. It will also make it a great deal easier for advisers to demonstrate to the FSA that they are fulfilling the requirements of the review.

Our network is already working to develop technology that will smooth the transition into a new era of more consistent and transparent communication. Our first step has been to develop the ability to create different categories for different types of clients on our system. It is up to the individual adviser to define the parameters for each segment, but the software can then work to assign each client based on their profile, saving significant time and administration.