Quarter of firms yet to review client offering

A quarter of advisory businesses have not yet reviewed their client propositions with the retail distribution review (RDR) in mind, research suggests.

Of 465 firms questioned by service provider Aim Two Three, 23% said they have not revisited their client offering to ensure it will be RDR-friendly, and profitable, from 1 January next year, when RDR is rolled out.

The remainder said they had completed an audit of their proposition.

David Ingram, founder of Aim Two Three, said that, although some of the firms may only need to make small changes, there was still cause for concern.

“To find such a high proportion of these firms not yet ready for RDR, this close to the introduction of the new rules, is worrying and tends to confirm our view that 2013 may well see more firms leave the market as they fail to convince consumers of their value,” he said.

Phil Billingham, strategy consultant at Threesixty, suggested there were also questions about whether the firms who had considered their propositions had put enough emphasis on the financial future of their businesses.

He said: “I’m not sure IFAs have properly worked out the profitability of their propositions. What a number of firms have done is to take a view that, if the client has enough money, there’s enough profit.

“Some firms are going to have difficulty when they implement the proposition and a number of advisers may have problems dropping clients who are not currently profitable.”

For firms that are yet to review their client propositions, Billingham advised them to first identify who their core client is. He said: “Advisers must ask: ‘What do they do, who do they do it for and where do they do it?’”

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