Recognising RDR reality

The need to challenge planning assumptions

With the Retail Distribution Review (RDR) now being implemented almost two years ago, the UK life, pension and investments markets are experiencing the real impact of one of the most significant reforms in the retail investments market.

This document, published in July 2013, aims, in the form of provocations, to provide stimulus for discussions on strategic challenges for the different market participants in the post-RDR world.


The document is structured around four different provocations:

  • Responding to the emerging advice gap  for the  mass market consumers;
  • Addressing the strategic challenges for the non-advised platform proposition;
  • Achieving success in providing advice to the affluent / High Net Worth market;
  • Thriving as intermediary focused platforms consolidate.


We set out below the 3 main strategic imperatives for banks, FAs/wealth managers, platforms and asset managers/life companies.

For banks, the first strategic imperative appears to be developing an innovative model to continue to serve the mass market customers, who are now an underserved segment. Secondly, they need to identify the best way of serving their existing mass affluent and High Net Worth customers. They will need a differentiated proposition plan to attract and acquire customers, many of whom already have existing advisory relationships with IFAs. Lastly, banks must ensure their direct to consumer platform is effective and integrates into a broader multi-channel approach.

For IFAs/wealth managers, the first strategic imperative appears to be developing a credible ongoing service proposition to justify the current level of advisor charge. IFAs are now competing for a smaller pool of wealthier, more demanding customers. They will need to have clear value-adding activities (e.g. tax planning, robust risk profiling). Secondly, they must develop multi-propositions to appeal to the different customer segments. Lastly, given potentially unsustainable levels of pricing and the huge variance of efficiency between companies, they should focus on improving operational efficiency.

For platforms, the first strategic imperative appears to be developing a clear strategy to be one of remaining profitable platforms, whether that is a niche or scaled player. Secondly, in an increasingly competitive environment, they need to be creative in developing capabilities to position themselves as the solution partners for advisor firms.

Lastly, operational leverage must be improved, to make sure the costs do not escalate uncontrollably.

For asset managers/life companies, the first strategic imperative appears to be determining their balance on direct to consumer vs. intermediated retail vs. workplace distribution. Secondly, different products need to be developed to target at the different customer segments – e.g. developing simpler, packaged, outcome oriented products, tapping into the mass market advice gap opportunity and wider customer trends. Lastly, with the squeeze on margin, asset managers and life companies will need to continue to improve their focus on operational efficiency, ensuring a greater link between performance/fees and cost level.

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