Your value proposition: pre and post RDR (part 1)

06 November 2017Myra Knoesen

While some see the Retail Distribution Review (RDR) in a positive light in terms of regulating the market and supporting the integrity of the insurance market as a whole, others believe it is complex and will be costly.

During the Momentum Risk Summit, held at Sun City Caroline Da Silva, Deputy Executive Officer at the Financial Services Board (FSB) emphasised that advisers are faced with social, economic and political threats that challenge their businesses every day.

“In these times, unless we have some kind of structural change, advice in its current form will not be sustainable. We want RDR to shape an environment that ensures that fair and affordable advice is available to all, and in order to ensure that, we have to make sure that advisers and advice is sustainable,” she continued.

“We have to do things differently, we have to understand business, clients and we have to be outcomes based,” she said.

RDR and the adviser community

Rachel Best, Associate Director at PricewaterhouseCoopers (PwC) discussed the RDR challenge and what it means for the adviser community.

“RDR will introduce/change a broad set of proposals to regulate the distribution of insurance and investment products, it will differentiate and categorize advisers, distinguish the split between services to customers, product suppliers, services linking customers and product suppliers, define permissible types of advice fees and cap permissible commission payments for risk products (supplemented by advice fees),” she said.

“The key consideration for you, as an adviser, is to not only have a value proposition today that you can charge for, but a proposition that will remain relevant post RDR,” she said.

Best said there are a few more considerations to take into account. “Firstly, how important is categorisation to your client, for example, tied versus independent? Secondly, is your client understanding of the current commission model today and how that will change post RDR?

It’s all about being sustainable

Regulation is here to stay so we need to prepare rather than find fault because that will not help us. These changes will create a sound foundation for the industry to be recognised as one that can be trusted over the long term. 

While some believe RDR will be complex and costly, it is best to embrace it and prepare because we are going to make it difficult for ourselves. As Da Silva mentioned you have to do things differently. Understand your business, clients and focus on being outcomes based. It is all about being sustainable pre and post RDR. 

In part two of the article we will take a look at how to package your value proposition pre and post RDR.


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