In the final year of preparation for the Retail Distribution Review, most advisers say they know they will make changes to their business model but many are still trying to decide what the best option for their firm is.

Choosing a trading model

Aviva’s latest Adviser Barometer finds that over three quarters (77%) of advisers say they intend to give independent advice, with a further 9% considering restricted advice (restricted to specific products or providers). However, over half (52%) have not yet definitely decided on the trading model they intend to operate post-RDR. A tenth (11%) even say they do not know when they will make that decision. 

Choosing between an independent or a restricted trading model is a key concern for  a sixth (16%) of the intermediaries surveyed by Aviva, and 9% of advisers say they have no idea what model they will use.

For those who cannot decide on one model, the FSA has suggested that some firms may want to consider running two separate legal entities – an independent and a restricted arm – but this could be a challenge for smaller firms, both in terms of cost and resource. Only 6% of advisers say they are considering a multi-advice model, where the client chooses the type of advice depending on their need and willingness to pay.

Seeking advice

New guidance from the FSA has brought some clarity on the activities expected of independent or restricted advisers post-RDR.  Three fifths (60%) of advisers surveyed still believe they need more support as they prepare for RDR implementation with half of advisers (50%) wanting more help from the FSA.

So far, advisers say product providers and networks have been the best sources of advice (each cited by 41% of respondents). Just over a quarter (27%) have received support from their own firm, suggesting little internal training exists. This is likely to be a reflection of the resource restrictions smaller businesses face, as training and support is more evident in larger firms with 10+ advisers.

Segmenting customers

How to segment clients and deciding on the services to provide them is another major concern, cited by about a quarter (24%) of respondents. Almost two-thirds (62%) of advisers say their firms are adopting different levels of service for different types of clients.

This shift may result in advisers cutting back on the areas in which they advise, with a tenth (11%) saying they plan to do so. Over a quarter (28%) of intermediaries say they intend to refer clients to other advisory firms or providers if they do not offer the services the client needs.

Andy Beswick, intermediary director at Aviva, says:

“The fact that almost half of advisers have already decided on the trading model they intend to operate post-RDR shows that intermediaries are making the big decisions. However one in ten advisers are still unsure what model to use and are not certain when they will make that decision.

“With 43% of advisers saying they would like more help to prepare for RDR, there is clearly a need for further support. We are proud that product providers have been a useful resource for advisers and are committed to providing the practical guidance and technical support advisers need as they make this important transition. Through our website Aviva for Advisers and our support programme ‘Achieve it with Aviva’, we are giving intermediaries the dedicated help they need.“