Lighthouse Group concedes RDR will cut advisers' remuneration

20 September 2010

Lighthouse Group has placed its focus on bagging new corporate clients in a bid to see off what it argues is an inevitable loss of remuneration per client for its advisers. Announcing results in which it reported an 11% rise in revenues and a 20% boost in recurring revenues, the network recognised that the retail distribution review (RDR) remains the major threat for the business. The results show trading in line with expectations. Profits were up modestly from £8.6 million in the first half of 2009 to £8.9 million in the most recent period. It follows a busy six months in which the firm sold its City Trustees business for £1.85 million and secured a preferred deal to advise members of the mammoth Unison union on their pension arrangements. The group's executive chairman David Hickey said: 'The retail distribution review, due to come into effect by 1 January 2013, and various other regulatory changes, continue to dominate industry prospects. 'Many of the likely outcomes are becoming clearer. Increased adviser qualifications will lead to a reduction in the number of advisers; the parallel increase in capital adequacy requirements for smaller firms will challenge the continued existence of many; and the removal of commission on non-protection related product sales will remove the financial lever currently available to product manufacturers. 'Within a couple of years, there will be considerably fewer advisers operating outside major organisations, such as Lighthouse; many advisers will see reductions in remuneration per case; and manufacturers will need alternative strategies both to maintain market share of new business and to ensure continued persistency of existing business. 'Lighthouse continues to assist its advisers in securing the remaining qualifications required. The expansion of the affinity relationships continually increases the number of new clients available to the Group's advisers, to compensate them for any pending reduction in income per case; and discussions with leading manufacturers are progressing to ensure that the Group benefits from their expected future greater proximity to the major distribution groups.' Published by CityWire