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Almost half of financial advisers believe industry has not done enough to survive RDR


Almost half (43 per cent) of financial advisers do not feel confident that the industry has accepted the need to make fundamental changes to its business models to survive the changes imposed by RDR, according to research from investment and wealth manager Heartwood.

When asked about their own practices, however, IFAs were more positive, with 90 per cent of those questioned positive that their firm had the expertise to make the required changes.

As the deadline of 31 December 2012 approaches, Heartwood believes that outsourcing through a discretionary fund manager (DFM) or investment manager will be advantageous for many IFAs, allowing them to concentrate on the advice and planning process. Heartwood’s research found that this was where advisers believed their clients derived most value from their relationship with an adviser, with 38 per cent specifying the advice process and 36 per cent the development of a financial plan. This was followed by help with articulating goals (31 per cent).

The research further revealed that outsourcing is already widespread amongst IFAs, with almost half (43 per cent) already outsourcing their client portfolios to a DFM and a further 13 per cent of advisers intending to do so. Among intermediaries who already outsource to a DFM, over a third (36 per cent) plan to increase the number of client portfolios managed by a third party.

Mark Rockliffe, head of intermediary sales at Heartwood Investment Management, says: “The research clearly shows that IFAs are confident that they will be able to make the changes needed to survive RDR, but are more sceptical about the ability of the industry as a whole. A significant proportion of advisers are looking to outsource their client portfolios to a DFM or Investment Manager, and we expect that the onset of RDR will stimulate the market even further. Importantly, financial advisers and planners are increasingly outsourcing the investment management for more portfolios, and are looking for a solution across their client base. This allows advisers to focus on cultivating relationships with clients; while outsourcing to an investment manager can deliver the disciplined investment management process that can help to streamline an adviser’s business and increase scalability.”

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