Aviva: Proof advisers are well-advanced in RDR prep

Aviva’s Dean Lamble reveals some surprising results from the insurer's most recent Hot Issues Tracker adviser survey.

Some good news has emerged from all the recent negative headlines:

The most recent Hot Issues Tracker reveals many firms are well-advanced in their preparations for the RDR, and others progressing rapidly, therefore the change in just over 18 months time may not be the shock many were predicting last year.

However, it is perhaps unsurprising the RDR still features high on the list of firms’ concerns for the immediate future. Almost half (49%) said this remains their greatest concern for the next three months – with a further 38% citing the need for new adviser qualifications, and a further 34% focused on generating new client leads. Concerns about the continued economic uncertainty have now been relegated to fourth position.

In terms of targeting clients going forward, 63% of firms say they are now planning to segment clients and try to deal with everyone, with 23% planning to drop lower value clients and focus on the more profitable ones. Just 9% are preparing to embrace lower value clients and offer alternative forms of advice.

There are some notable differences in attitude between appointed representative (AR) and directly authorised (DA) firms here, with ARs more likely (67% vs 60%) to be planning to segment and deal with everyone, whereas DA firms are more likely to be planning to focus on the most profitable clients (27% vs 19%).

Costs are always crucial, and it is widely understood that chasing new business is more expensive than working with existing clients.

It seems firms are seeking to consolidate their clients before 2013. The importance of recurring income from clients is already significant, demonstrating how advanced along the path to RDR-readiness some firms now are.

Eighty-five per cent saying it already accounts for between 1% and 70% of their business, but while 20% say they expect it to remain the same, 77% say they expect this to increase over the next two years.

Diversify offering

The Hot Issues Tracker also found firms are looking to diversify their product offering to maintain income levels in the post-RDR world. The product line advisers consider most likely to provide additional income in the future is currently protection sales, with 57% of advisers saying they will be increasing this side of their operation – ahead of other revenue sources including: taking on orphan clients from other firms (35%), general insurance sales, and referral of clients to other advisers or providers (both 28%).

There are some interesting differences between directly authorised and appointed representatives here though, with 63% of ARs preferring protection compared to 51% of DA firms.

And 40% of appointed representative firms are looking to increase revenue from sales of general insurance compared to just 18% of directly authorised firms.