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Advisers adapting well to a post-RDR world

Adaptation to the RDR is having a discernible impact on profitability in the adviser community, with almost two-thirds of businesses saying they are more profitable than in 2013.

Advisers adapting well to a post-RDR world

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Taking part in a survey conducted by investment platform company Cofunds, 60% of advisers revealed that their businesses are more economically viable than 18 months previously, despite more stringent regulations and significant changes to pensions landscape.

Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers, said that increased profitability was unsurprising and showed that advisers have been implementing the necessary changes to ensure they adhere to the new regulations.

“Regulatory reforms over the last few years have made advisory businesses take a much harder look at their business and profitability, making profitability a core component rather than turnover,” he said.

“It does not surprise me at all that a lot of businesses are more profitable than they have been in the past, because they are gearing themselves towards that. Advisers are much more focused on providing an ongoing service for which they are charging an appropriate amount, and that in itself leads to more sustainable businesses.”

Two-thirds of those questioned also described the current business environment as ‘busy’, and when quizzed on the potential impact of the ‘Sunset clause’ – due to be imposed by the FCA in 2016 to assess firms’ income on client asset – a majority said they were unconcerned, while only 10% believe the transfer of clients to clean share classes could pose a problem.

However, advisers are less buoyant on the investment outlook as a whole, with only a third saying they are ‘positive’, with projection of revenue and fee justification cited as potential hurdles.

Andy Coleman, Cofunds’ director of distribution, said: “You can’t say it’s not an interesting time to be involved in financial services, with advisers having to keep up with continuous regulatory changes while also having to justify their fees and potentially provide new services to clients.

“It’s encouraging to see that advisers are feeling well-prepared for the 2016 Sunset deadline and this backs up the changes we’ve already seen on our platform, with over 60% of assets already in clean share classes.  

“We’re actively supported advisers to make the changes to their businesses at a pace that suits them and this is helping to reinforce the positive view of the future they clearly have.”

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