It is obviously early days, but so far there has been little obvious reaction from the public, advisers or providers, with the exception of one provider reporting problems with their illustration systems.
However, one thing that is less obvious is that we are seeing a big increase in the number of adviser firms that are very clearly rethinking their whole business model and discussing with us the potential to mass migrate their clients over to a model like Novia’s, which is whole-of-market and utilises technology as far as possible to cut down time and effort.
The sudden surge in discussions like this is no doubt due to the impact of the RDR. Until now, advisers may have been naturally much more focused on getting their qualifications, rather than thinking about which platform to work with. But attention is now clearly being paid to how to make money in a world of transparency and falling margins, and in this respect our industry is no different to any other that has taken the leap to embrace technology.
One of the keys to success for any firm must be to keep production costs to an absolute minimum and boost staff productivity, which should result in profits to the business – that is basic business sense – but all we see in the market is platforms trying to undercut each other by a basis point or two.
We at Novia make a huge effort to utilise technology as far as possible and to get technology to do the work instead of people. It is inevitable that people make mistakes and mistakes result in rework and cost all round.
The focus for us is also about giving advisers the tools to automate the repetitive and complex routine jobs, resulting in freeing staff up to do the core productive work of servicing clients.
It is vital advisers understand how these tools work and any shortcomings they may have, otherwise – to borrow a topical analogy – they really are driving on black ice. Just to give one example: we have spent a lot of time and money building a sophisticated capital gains tax (CGT) reporting tool that deals properly with accumulation units. If this is not done correctly, clients can end up paying more tax than is necessary (guess who foots any compensation claim?) and we have recently seen one platform pull a substandard CGT reporting product off the market.
The FSA has already given a clear indication that it expects advisers to fully understand the tools they use and the limitations that these tools have rather than just accept them at face value.
We at Novia think the RDR will actually turn out to be a catalyst for change in the market and will drive providers and advisers towards building models that deliver good-quality advice to the consumer in a much more cost-efficient way than has been the case in the past.
