The industry of the future will be built today

How the world has changed. There is a maxim in martial arts which says that the student will become the master, and the master will become the student. This shows the continuous cycle of the changing dynamics of the art.

In a sense we have seen this in the financial services industry where the public is demanding more clarity on issues such as fees and distribution models. They want to engage with intermediaries on a level playing field.

There has been some fear around this. But in principle, the changes will be positive as it will allow insurers and intermediaries to engage with others on a level playing field, where clients are seen more as business partners.

This is the true value of the Retail Distribution Review (RDR). And this maxim is supported by many in the industry.

Richard Rattue, Managing Director of Compli-Serve SA

“RDR should not be perceived as a threat, it has the potential to ensure a fair deal for customers and levels the playing field. Opportunity beckons for the forward thinkers.”

Danny Joffe, Legal & Compliance, Hollard Broker Markets

“The positive side to RDR is the very constructive engagement that has come about between the industry and the regulator. There is now meaningful ongoing communication to finally agree between all stakeholders on how best to make sure the consumer is treated fairly and to eliminate the negative image that may exist in the industry. Every stakeholder brings their own exclusive value add to the debate, and with all views being carefully considered, we are positive the final enactment of RDR related legislation will improve the financial services industry for everyone in the system.”

Mohammed Patel,Head of Regulatory Risk & Compliance. Mutual & Federal

"RDR has given insurers the opportunity to engage with policy makers, the Regulator, distributors and consumers. Insurers have to become active in creating and strengthening their products and distribution channels. Active engagement will lead to organizational and industry growth. RDR is the first of a number of potentially ground breaking regulation in the wake of the new market conduct emphasis being used to regulate financial services both locally and internationally."

Ian Middleton, Managing Director, Masthead

“Having spoken to 1 000s of brokers face-to-face this year, it’s pleasing to see and hear that they understand and support the objectives of RDR… they’re not against change. The overwhelming majority of brokers do a really good job for customers and want to continue doing this. They’re looking for reasonableness and certainty, and they want to profitably deliver value to customers over the longer term.”

Gert van Rensburg, Head of Distribution, Hollard Investments

“We believe that RDR’s activity-based approach supports our view that Independent Financial Advisers (IFAs) will continue to play a critical role in the future, in delivering products and suitable advice, on a commercially viable basis. Our business is focussed on supporting IFAs to achieve this.”

Godfrey Nti, Chief Executive Officer, the Financial Planning Institute

“The RDR paper has presented the financial services industry, and its professionals, with the best opportunity to gain respect and recognition for the profession. The proposals will see financial services professionals review their current practices to ensure that their business models are aligned to deliver the services in a manner that more educated consumers are now demanding. RDR will therefore, play a vital role in enhancing the trust consumers have in the financial service industry, benefiting financial services businesses and its professionals. On the other hand, consumers will be more informed and protected, and can make better decisions that will help secure their financial futures. The industry is on the cusp of an exciting change and the Financial Planning Institute (FPI) is delighted to play a role in this changing landscape.”

Lesedi Letwaba, Regulation & Compliance Executive: Centriq Insurance

“In the recent past, we have not seen the financial services industry, in unison, getting so involved in crafting and shaping the laws that regulate the distribution of financial products. The RDR has thus managed to solicit and encourage pro-active participation from all financial industry players such as insurers, banks, financial advisers, Collective Investment Scheme (CIS) managers, legal advisers, etc., in shaping the framework that intends to ensure that the customer and financial services industry players are treated fairly.”

“Though consensus has not been reached on what the respective roles and responsibilities are between product suppliers and their chosen distribution channels in relation to treating customers fairly, the RDR has led to the financial services industry participants sharing ideas on the most efficient way of distributing financial products well ahead of the finalisation of the framework.”

Johan Minnie, Managing Director – Sales & Distribution at Liberty

“I believe the biggest change RDR brings to the industry is also the most positive one: for the first time ever clients will realise that they are being charged for advice and hence, will have to pay for it. This is obviously good for clients, as they are only charged for what they receive. However, we must realise it is also positive for advisers and planners. At the moment, current practice sometimes leads to clients receiving advice at the cost of the adviser; there is no clear responsibility to pay for that advice. This will change under the new dispensation. Financial advisers and planners will be in a much better position to charge for quality advice based on instructions from the client – provided they have a clear client value proposition.”

Bricks and mortar

It is natural to be nervous about change that will be radical. However, it could be a radically good change. With the implementation of RDR, we are taking our first steps towards creating an unambiguous industry that is driven by aspects such as trust and value creation.

We all talk about wanting to leave a better industry for future generations, why don’t we support RDR and show that the industry of the future will be built today.