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RDR could strip 'adviser' label from individuals
04 August 2010
The RDR could lead to the term ‘adviser' being used exclusively for firms rather than individuals as well as the launch of new 'advisory chambers', according to AIFA. It a new report Advice Horizons: Plotting a course through the RDR, AIFA says: "One of the changes the RDR may bring about is that the term "adviser" becomes exclusively used in connection with the firm and other titles and descriptions are applied to those who work within it (with differing employment contracts and statuses)." An early signpost along this "journey" is the different positions firms are adopting about client "ownership", it says. "Clients are increasingly considered to be the client of the firm and not the individual adviser, as the firm takes full compliance responsibility for the activity of the adviser whether he or she is employed or self-employed." AIFA also sees the emergence of "advisory chambers" post-RDR, sitting alongside traditional national and regional models. "In this model, firms of a shared business ethos could come together to gain shared back-office efficiencies while maintaining a discrete brand and ownership." A step beyond this, the report says, is for specialist firms to cluster together to provide shared services to clients based on the depth of expertise within their potentially nationally dispersed chambers. "The "ownership" of the client could be resolved on a formal, contractual basis, or via an informal mechanism based on quality and value of referrals. Of course, larger firms may also use this model as they centralise specialist advice areas in order to ensure quality of advice and hence, lower their risk profile." A third, more wide-ranging option could be the creation of "professional advisory chambers". These would unite legal, financial advisory and accountancy firms either as a single legal entity or a strategic alliance of firms. It says there are also possibilities for creating new "hybrid firms" through joint ventures and strategic alliances with product providers and investment managers. Other predictions in the report include a future charging environment which combines different approaches, rather than a "one size fits all" model. Time-costed fees, a monthly retainer, and fees based on assets under management, will be used individually by advisers looking for a simpler approach. But AIFA expects advisers seeking a 'tailored solution' for clients will combine all three. Published by IFAonline
