11 months to go…

With 11 months to go until R day, we may be in the midst of the calm before the regulatory storm.

There will inevitably be some pinch points to come as the advisers who have left things late start to give the qualifications and charging challenge their undivided attention.

Of course, it depends on which survey you read and believe to make a firm judgement about the overall state of readiness of intermediaries. This makes it challenging for providers trying to calculate where they stand and what help and assistance they may wish to provide.

At Space 01, from our conversations with advisers, we think IFAs can probably be divided into three loose groups.

There will be a large number of advisers, hopefully a very large number, who have met their examination requirements and filled their gaps or are very close to doing so.

With luck, they will now be working on finalising their charging models. The more dramatic cut off point for individual commission may mean that plans for ‘adviser charging’ are probably ahead of those for ‘consultancy charging’ on group pensions. For the latter, many providers are due to reveal their plans and possible charging shapes in the next few months.

For IFAs in both the individual and group markets, we think providers that offer advisers help on the communications challenge surrounding the new charging structures will win significant credit.

The second group of advisers may be only part of the way along the journey to getting their qualifications but are very likely to make the cut. Many insurers and fund managers have provided all sorts of study programmes and advice in a bid to help IFAs over the qualifications threshold.

We don’t think it can hurt to keep reminding advisers where they can access that help and how. In an ideal world, advisers might have carefully selected a programme of work that would best suit their specialities. Now we think most advisers will see it is a matter of getting over the finish line. We think providers that can help them do so as efficiently as possible must stand to gain.

The final group may be the most problematical. If they are simply starting out, having previously refused to meet the requirements, then their work is cut out for them. Some of these advisers may make it by December. Nothing concentrates the mind like a deadline but there may be capacity issues in terms of assessments. Other advisers who work in big firms may take on other roles, until they can get to the required level later in 2013.

Some may also become protection specialists, mortgage and protection specialists or even business introducers and consultants. As a result many will remain intermediaries of a sort, though for the introducers, we suspect there will be more regulations to come to emphasise that they must not try to influence client decisions beyond the initial recommendation to see a qualified adviser.

More generally, we don’t think providers will need to reach these ‘consultants’ unless of course they decide to finally get down to doing the exams.

If you are a protection provider the challenge is obvious at least with some advisers – to help advisers transition their businesses away from pension and investment advice compliantly although there will be pricing challenges here which we will address in a later blog.

Actually this arguably applies to IFAs more generally as well, because some adviser businesses will seek to expand this income stream as an insurance against client resistance to customer agreed fees. There may certainly be a case for protection providers considering ways to help advisers brush up on their protection skills.

As we said at the start that is our rough assessment of where the market divides and the sort of places where advisers might be grateful for the support.

We haven’t put percentages on these numbers on these groups and suspect that even the surveys that ask advisers to assess where they are themselves involve quite a bit of subjectivity and even a little bit of wishful thinking.

However as the situation becomes clearer, the Space 01 blog will examine progress towards the RDR and share our thoughts on the areas where we think providers can help and ultimately benefit from in what will surely be a turbulent few months. As ever, your views, whether you are a provider or an adviser, are very much appreciated.