Refining your model in the run-up to 2012

Aviva’s director of distribution development Dean Lamble examines what advisers are doing to prepare for RDR.

The demanding economic situation continues to take a toll on all businesses in the UK. But intermediaries have the added complication of the forthcoming changes to financial regulation to contend with too.

Recognising this, Aviva designed the hot issues tracker to maintain close contact with advisers and monitor business issues as they develop.

Regulatory challenges

Unsurprisingly, the latest hot issues tracker for Q1 2011 found the forthcoming regulatory changes remain the single largest challenge facing advisers at present, with 64% saying this was an issue for them. This was followed by poor trading conditions (57%) and then issues relating to customer retention/lead generation (30%).

The tracker also identified four key areas of focus for advisers’ business models at present: reducing costs and increasing efficiency; exploring additional revenue streams outside of fee income; ensuring recurring income; and an increasing emphasis on customer segmenting and targeting.

To prepare for the impact of the retail distribution review (RDR), adviser firms are already looking to supplement potentially flat revenue streams by reducing costs and increasing efficiencies. Anecdotal reports suggest firms of all sizes are now implementing centralised administration functions and making greater use of paraplanners.

So investment research is being effectively outsourced to a third party, allowing advisers to maximise the proportion of their time spent in front of clients.

Greater use of front-end and back-end systems and technology is also helping to achieve efficiencies as it can help streamline processes, reducing preparation time for meetings and keeping track of decisions and key dates. There are two schools of thought with these systems – the platform route or an adviser back-end system.

Sixty-seven percent of advisers now say they will turn towards adoption and greater use of platforms to reduce their costs in the post-RDR world, compared to 33% that are targeting greater use of adviser back-end systems.