SUMMARY 1
Impact 1
Ovum view 1
Key messages 2
RDR has major implications for the intermediary business model 2
Need to support AC will impact distribution management on the provider side 2
Meeting RDR requirements will significantly increase compliance burden 2
Robust and flexible MI systems will be essential to drive desired outcomes 3
Intermediary management will need to support both commissions and AC 3
Firms needs to strongly consider integration strength and change capability in evaluation of vendor packages 4
business Focus: RDR will be dominant compliance driver up to 2012 5
RDR will drive major structural changes to the retail investment sector 5
RDR has major implications for the intermediary channel business model and product distribution 6
Changing remuneration from provider to consumer will drive significant business model disruption 7
Direct advice pricing may benefit bancassurance over the IFA sector, particularly at the low end of the market 9
RDR will impact distribution strategy on the provider side with the need to support AC 9
While final policy statements have not been published, firms need to start preparing for RDR 10
Meeting RDR requirements will significantly increase the compliance burden 11
Ensuring training levels will be an ongoing issue for both authorized IFAs and IFA networks 13
Supervision by IFA networks will require ability to assess advisor risk and increase supervisor productivity 14
Treating Customers Fairly and suitability requirements will continue and intensify 14
Firms need to focus on outcome, processes and culture over reporting 15
Regulators will be looking for senior management commitment to regulatory principles 15
Robust and flexible MIS will be essential to drive desired outcomes 16
MI needs to be complemented with strong business controls, although a risk-based approach can be taken 17
Complaints management is about approach, review and consistency, as well as timeliness 18
Technology FOCUS: ALIGNING Technology to SUPPORT RDR ReQUIREMENTS 19
Firms should look at BPM and performance management to handle RDR cost 19
IT will be essential to both deliver RDR requirements and manage cost implications 19
Management information systems need to support open-ended measurement and broad analytics 21
Firms need to develop a BPM layer in application architecture to allow the control and alteration of processes 21
Compliance productivity to drive scale requires case management and relationship management tools 23
Providers need to evaluate RDR systems impact on distribution and pricing 23
Intermediary management will need to support both commission and AC 24
Adviser charging will be a challenge for providers offering older and non-pension products 25
The medium-term impact on providers will be managing the turbulent distribution landscape 25
RECOMMENDATIONS 26
Recommendations for financial services institutions 26
Distributors need to look at the strength of front office applications to support advisory services 26
Providers need to look to improve the overall quality of service provided to distributors 27
Recommendations for vendors 28
Firms need to consider integration strength and capability to change in their evaluation of vendor packages 28
APPENDIX 30
Ask the analyst 30
Definitions 30
Further reading 30
Disclaimer 30
List of Figures
Figure 1: Advice levels and current RDR requirements 7
Figure 2: After economic and market conditions, IFAs see RDR compliance as their strongest challenge 8
Figure 3: Current timetable stages for RDR implementation 11
Figure 4: Increasing qualifications are seen by IFAs as the greatest challenge in meeting RDR 12
Figure 5: FSA's approach to assessing MI for TCF initiative 17
Figure 6: Compliance requirements from RDR, operational implications and technology enablers 20
Figure 7: Implications of RDR on provider IT and operations functions 24
Figure 8: Strong servicing and product performance are the top IFA requirements from providers 27
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