We are now six months on from the implementation of the retail distribution review. Over the period we have seen reports that adviser numbers are down by twenty percent and that a number of businesses were behind on their post RDR forecasts.
While I am confident that firms will do whatever is required, to adapt charging models and change culture, to embed the RDR into their organisations and make it work for the immediate future the newly formed FCA are signalling that more regulation could well be on its way.
The FCA’s Business Plan and Risk Outlook outlines that it intends to continue focus on retrospective market conduct but more interestingly they are also planning to delve into areas previously untouched by the FSA including potential lapses. While previous regulation required firms to look back this regulation would require firms to look forward and identify products, services or sales practices that could cause concern but are not yet on the supervisory radar. The FCA wants firms to consider the lifecycle of a product and be proactive in doing the right thing where concern is raised.
The conduct and risk agenda is set to have far reaching implications on how businesses are run and how products and services are marketed to clients. In order to be prepared for these changes technology will need to play a significant role.
While many firms made huge progress in ensuring technology was a central pillar to their operational plans for post RDR operating models it seems that implementation has been left at the hygiene level, ensuring charges can be reconciled and the data required for RMAR returns recorded.
The new regulations will require firms to make far greater use of technology and in particular have a much better understand their data and this is where Client Management System (CMS) will have an even bigger role to play.
Big Data seems to be the current trend topic and many firms are trying to define what this means and how they should engage with this. While a new set of words Big Data isn’t actually anything new. For me it is simply a method to bring together and analyse data from multiple sources, whether that data is internal or external, structured (e.g. set format data such as client and policy data) or unstructured (e.g. social media and text data).
For many firms Big Data will have little relevance until it is put in context. Data needs to enable a business to answer questions and make informed decisions. For example what is the total exposure of my organisation to a particular fund or product which was compliant at the time it was sold but on review may no longer be suitable? Which clients have exposure to the fund or product and what is their exposure? Which of the firms advisers have sold this product or fund and when was it last sold?
Achieving this type of analysis should not require an organisation to spend hours or days running queries, pulling together spreadsheets and downloading data from extranets. It should be something that can be done instantly and intuitively through dashboards, where the firm can move seamlessly from high level data to drill down into specifics.
The fewer the data sources, the easier this is to achieve and firms should look to centralise their data as far as possible onto their CMS. The CMS should then also help a firm to apply rigorous controls on data quality.
The final key ingredient is then the technology to bring the data to life through visual dashboards. In this space SSP are leading the way and their Business Intelligence dashboards are well worth a demonstration.
Organisations should not be frightened by data or view it only as a means for compliance, done correctly it can be revolutionary in helping you find opportunities and the pay back on time and cost can be many times the investment.
About the Author
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