In March 2012 Defaqto completed an online survey with 161 advisers exploring their attitudes and behaviour regarding RDR.
None of the respondents believe that the general public is aware of the RDR and fully understands the implications it will have for financial advice. Furthermore, 80% of advisers felt that the public know nothing about the RDR at all.
Defaqto says this finding highlights the extent of the challenge that advisers face when putting together their RDR compliant business propositions and, ultimately, in communicating their post-2012 offering to clients.
Defaqto’s survey also found that 78% of advisers thought that the FSA and/or Government-led publicity campaigns to raise awareness would help them to educate their clients about RDR. Meanwhile 81% of advisers believed it would be beneficial if they were provided with educational materials to help get the message across to clients.
“While the RDR is going to have a significant impact on advisory firms and their appointed representatives, the need to undergo a change in business model and service proposition, along with a fundamental change the way advisers are remunerated, is also likely to have a major impact on clients,” said Fraser Donaldson, Defaqto’s insight analyst for funds.
“It would be sensible for advisers to start communicating with their clients as soon as possible so that they get used to the forthcoming changes. With something as fundamental as adviser charging, some market research with clients on preferred payment methods and level of payment they are likely to accept may be advisable, as a sudden change in charges could cause additional problems.
“Generally speaking, there will be more of an onus than ever on advisers to sell themselves and their services to clients, to justify the fees they will charge – but this is also a potential opportunity for advisers to engage with clients and differentiate themselves.”