Is Research a worthwhile investment?
With the series of Discussion Papers, Interim Updates, Feedback Statement and now CP09/18 published last week, the RDR (RDIP) story rolls on towards the milestone deadline of 2012 – Olympic year. The CP has much to talk about and no doubt we, and much of the industry, will be debating the implications over the coming weeks.
We were talking with one of the major technology suppliers last week and the debate turned to the role and future of Product & Fund Research tools. There was a feeling that these have lost their attraction and perceived value over recent years and a question of their survival was posed. Our own view was that there could be resurgence in the appeal of these tools in a post RDR world; especially driven by the need for IFAs to have assessed the whole market for product suitability and fund choice. Whilst I am sure there are many IFAs that would say they already do look ‘holistically’ using their own knowledge or tools such as Synaptic, or Defaqto. That having been said, I still believe that there will be a good number that rely on a smaller ‘chosen’ group of ‘tried and trusted’ providers. The obligations of RDR will put more focus on the evidence to support the IFA’s claim that they looked at the whole market and made the most appropriate choice. Indeed, as with so much in UK regulation, the ability to ‘prove’ that this process has been fully applied is likely to be a driver in advisers turning to Research Tools, to both do the exercise and to have a demonstrable audit trail to prove it too.
These tools will have to be all-inclusive (breadth) in covering the market and contain comprehensive details on Providers, Products, funds and maybe even some product options that don’t often feature – such as National Savings. The information will most likely go beyond factual quantitative analysis and comparison, to include more qualitative information, including service and financial strength. Indeed, we have seen one such tool incorporate advisers’ feedback and we could see a similar situation to many Web2.0 applications where the ‘community’ of users provide and rely on their own reviews and these could be augmented with ‘independent experts’ and consultancy practices views.
The product and fund choices in the market are currently large and, notwithstanding provider consolidation possibilities, it is clear that more of what are currently non-commission paying alternative products will have to be considered when giving advice. Having so many options and a need to show justification in choice will be an added pressure. Some advisers may choose to do this work themselves, but this could be an expensive use of their time and if Research Tools are competitively priced, they could become one of a number of the necessary technology solutions that advisers use as a matter of routine.
We will shortly be doing a more detailed analysis of these tools and looking at if and how RDR may influence their development in the future.
Written by Mark Thelwell - Visit Website