Adviser > News > September 2009 > Opportunities in the current regulatory climate
Opportunities in the current regulatory climate
Find out how our investment range can help you provide a compliant investment service to your clients.
Over the last few years, a huge shakeup has taken place in the pension's arena. Several key events have forced IFA businesses to re-think how they write pensions business:
The Credit Crunch has had a big effect on the profitability of some IFA firms. Not only are advisers spending more time fielding calls from clients (and therefore spending time reviewing files) but if they have fund based renewal built into their income streams, this will have fallen significantly too due to the fall in the stock market.
Both the TCF and RDR initiatives have changed the way that intermediaries run their respective businesses. For many advisers, these initiatives will have meant a culture change and led to firms re-evaluating how they segment their client banks.
Finally, the FSA Thematic Review on Pension Switching1 has identified areas of failure in the advice given to transfer cases. The main areas of failing surrounded cost, unsuitability of funds chosen and the importance of reviews.
If these areas of failure are inspected a little more closely, it can be seen that most of the actual underlying reasons for failure are fundamental principles that have been ignored. For example the FSA cited the use of deposit funds on an illustration for comparison reasons but then using a discretionary fund manager for the client after the transfer was made. It should come as no surprise to most people that cases such as those highlighted above, failed.
So although there is an increased focus on regulation and the highlighting of poor advice, many of the initiatives will actually help businesses remain profitable in the future, as client segmentation is crucial to long term sustainability.
But what is client segmentation?
At its simplest, it’s effectively giving different levels of service for different categories of clients. Such an approach can help advisers become more efficient and so improve the profitability of their business.
Client segmentation is the solution at the heart of all of the above. It is also the key to the threat/ opportunity of Personal Accounts.
Although on the face of it, all these initiatives may seem negative, the reality is that they will help advisers become more efficient.
And pension providers are no different which is why we have developed a suite of investment options that can help meet these and future regulatory hurdles.
The TCF initiative is about treating customers fairly but not necessarily individually.
How we can help
Our investment range allows you to choose the level of involvement you have with clients but remain true to the principles outlined above.
The Scottish Life Governed Portfolio range allows clients to be invested into portfolios that take into account the client’s term to retirement and attitude to risk. The portfolios have active reviews of asset allocation – a required process which has been highlighted by the FSA in the Thematic Review.
Through a strong governance process, we can help you with the regulatory pressures the industry is now facing.
If you would like any further details our investment range, then please contact your consultant or visit www.scottishlife.co.uk/investment.
Source:
For professional advisers only
