Reconciling complex payments and being able to charge based on advice will be key challenges in the post-RDR world. It’s taken four long years, but finally the Retail Distribution Review (RDR) comes into force on 31 December 2012. Most financial advisory firms have made great progress in preparing for the change, but now is the time to look beyond the RDR itself and consider some of the everyday practical applications of the change.
“It’s all about moving to charging based on the customer journey,” said Shaminder Gill, Proposition Manager at SSP for Financial Advisers.
“The functionality we’ve been developing for the next release of our technology is designed to help firms build their propositions around events in that customer journey. This allows a firm to record each advice event with a client, the services that were delivered and the charges that are applicable.
“This is brand new functionality, and is based on the feedback we’ve received from our financial adviser customers through our regular user groups.”
New invoicing functionality enabling firms to invoice based on events in the customer journey is designed to help them with payment reconciliation. When it comes to clients paying for advice, payments can come via a host of routes such as from the financial product provider via EDI, account transfers, or by cheque. This makes reconciling these multiple payments and matching them against the advice provided a key challenge for financial advisers in the post- RDR world.
At its most basic level, payments to financial advisers will come from two main sources: those via clients and those facilitated via financial products. The invoicing function will also make it possible to record charges as both initial and on-going – split by Advice, Consultancy and Ad-hoc charge types.
“The end objective is to capture the total cost of the services provided, and ensure that income is reconciled with each piece of advice regardless of whether it’s come from the client or from a product,” Shaminder added.
“There are a number of reporting requirements that need to be addressed to take into account the new post-RDR charges. The reporting requirements impact both existing reports and the need for new reports in several areas and we will release a comprehensive reporting package to support both operational and management information in a post-RDR environment.” Considering the business impact Summing up the importance of the day for SSP’s financial adviser customers, Shaminder said, “Organisations need to consider the business impact of changing to post-RDR business models based around charging for advice and adapt their processes and people to accommodate the regulatory change. All of this will require the right technology and supplier to underpin the change.
“This is likely to be firms’ biggest challenge post-RDR. We at SSP will be there to support and advise our customers through this process, but organisations need to make sure they take this challenge seriously, and choose the right technology partner to help them through the change and to meet their objectives.”
About the Author
Managing Director, SSP Adviser —“What interests me is understanding how the financial services and general insurance sectors are evolving and helping clients respond to the challenges that this brings. I really enjoy working with clients to identify the business and operational drivers of value and then designing and delivering innovative insurance solutions that help them to meet tomorrow’s challenges.”More content by Sham Gill