70% of advisers can meet qualification requirements of RDR within three year

In July 2008, Standard Life conducted specific research through NMG Financial on the attitudes of intermediary advisers towards the FSA's Retail Distribution Review

and in particular their views on the direction of travel outlined in the FSA's Interim Report.

The FSA proposed that they would like to see one type of Adviser, Independent in terms of status and practices, remunerated without product provider input and with higher minimum professional standards than those currently.

The research therefore concentrated on three key themes - Professionalism, Remuneration and Status - and it's key findings are summarised below: Professionalism: - 70% of Advisers feel they could meet the qualifications requirements within three years and 83% within five.

- Adviser views as to who should operate a professional standards body were equally split between existing trade bodies and associations.

Similar numbers also thought that a new independent body overseeing other bodies was appropriate or that the FSA should maintain its existing role regulating professional standards.

Remuneration: - 56% would shift to a customer agreed remuneration or fee based model if commission were no longer available to IFAs, joining the 12% who suggested that they no longer take provider commission.

- The remainder believe they will exit the industry (11%) or revert to a sales model (17%) if commissions are no longer available in the advice sector.

- However, over half of respondents felt that their biggest issue in moving to this new model would be that clients would not be willing to pay for advice.

Status: - Two-thirds of advisers felt that acting in the client best interests was most important when defining independence.

- nearly twice as many as those suggesting that being able to recommend from the whole market was there first choice.

- However, only 14% of advisers suggested that being paid by the client rather than the provider would be in their top three when demonstrating their independence.

Finally, we asked Advisers what they would do if all of the RDR proposals outlined in the FSA's interim report came to be.

eg.

If Independent Advice is limited to those advisers with Diploma (or equivalent) qualifications, adopting fees or customer agreed remuneration and are members of a professional standards body: - 55% would join the 18% who suggested they have already adopted this model.

- Just 16% would retire or exit the industry (with the remainder reverting to a 'sales' model).

Peter Jolly, Head of Distribution Policy, Standard Life commented: "This research demonstrates to us that many Advisers have already taken steps towards the Diploma level qualifications requirements with over a quarter of those surveyed already meeting the RDR's requirements and the vast majority [83%] believing that they can make the standards required within 5 years.

This is hugely encouraging and goes against the popular opinion that a ten year transitional period may be necessary.

"In a worst case scenario, only 16% of Advisers currently believe they would retire or exit the industry if the proposals in the RDR Interim Report are taken forward.

Given that a proportion of these advisers would have been likely to retire during the next five years or so regardless of the changes, it's clear to us that the predictions of a mass exodus from some commentators are perhaps overdone.".

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