Rob Kerr of Scottish Widows tells Professional Adviser how his firm is supporting advisers post-RDR, whether they go down the independent or restricted route

It is difficult to predict exactly how the intermediary market will evolve during 2013 as advisers get to grips with the Retail Distribution Review (RDR). Scottish Widows’ head of distribution Robert Kerr believes roughly 15% of advisers will leave the market in 2013. This is down to a variety of factors.

Firstly, some advisers will choose not to get the necessary qualifica- tions. However, many of them may remain in the industry as intro- ducers. Secondly, some advisers will have a customer base of clients who are not willing to pay fees; and thirdly, those advisers who have generated income by switching clients from one provider to another will find this more challenging in the new transparent world.

Additionally, the challenge of providing advice to those clients with less than £50,000 worth of assets means we are likely to see a growth in non-advised services. While these services have a part to play in the market, we recommend advisers tread carefully and this will be a sub- ject for the Financial Services Authority in its early thematic review.

Restricted or independent?

For many advisers, the decision of whether to offer a restricted or in- dependent proposition will continue to occupy them. While there are strong reasons to go restricted in terms of potential savings in research and compliance, advisers will need to consider if their provider or product panel provides them with sufficient flexibility to service their existing and future clients.

“The decision of whether to offer a restricted or independent proposition will continue to occupy many advisers ”

Additionally, I remain sceptical that real savings can be generated from professional indemnity insurance as the independent sector has a superior claims history than restricted (or tied) advice. This, along with the continuity of service, breadth of offering and the brand of indepen- dence (which our research highlights customers will pay a premium for) mean we believe advisers need to consider
this decision carefully.

Scottish Widows believes both markets are valid and is in a strong position to support them going forward. As well as offering advisers access to its highly skilled consultant service, new flexible and trans- parent charging structures have also been applied across the proposition.

The scale of change Scottish Widows has introduced goes way beyond that needed
for RDR compliance and shows the firm’s commitment to supporting the advisory mar- ket now and in the future.

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