Capco Highlights Top Five Areas to Address if Businesses are to Succeed in the Post-RDR WorldBy Capco, PRNE
Thursday, February 10, 2011
With Industry Set to Spend GBP1.4bn on RDR Compliance, Doing it Wisely Will Differentiate the Winners From the Losers in the 'Brave New World'
LONDON, February 11, 2011 - Capco, the global business and technology consultancy dedicated solely to
the financial services industry, has identified five areas that need to be
addressed following the FSA's radical shakeup of business practices through
the Retail Distribution Review (RDR). While investment costs will be large,
the cost of failure is even greater and Capco has offered its guidance for
those who choose to remain in the industry.
1. Client segmentation
Given the requirements for 'fee for advice' and expected pressure on
these created by a more transparent and competitive environment, wealth
managers must segment their clients more effectively, so as to better align
customer value and cost to serve.
2. Financial planning solutions
With a wider definition of 'whole of market', independent advisors will
be well advised to use financial planning and product catalogue solutions to
allow them to stay abreast of a wider product range and provide compliant
3. Wrap platforms
Advisors will need more highly featured platforms through which to
transact report and manage RDR-compliant fees. These platforms will need to
offer an expanded range of products and wrappers.
4. Target operating model
With fees and margins under pressure, alongside rising regulatory
standards for professionalism and service, wealth managers must look to
optimise their operating models for effectiveness, efficiency and experience.
Given all of these changes, wealth managers must look again at those
services which can best be sourced from external providers. This will allow
them to achieve lower costs and greater access to skills and product, but
without sacrificing strategic differentiation. Equally, service providers
must reassess how the demands of RDR will change the needs of their potential
clients, and hence review the services they offer and the way in which they
go to market.
Mark Jenkinson, Capco Partner, provides further detail on the
implications of the Retail Distribution Review in his recent Point of View,
"They've been reviewing the situation."
The UK's Financial Services Authority's (FSA) proposals are due to
commence in 2013 and will have a far reaching impact on the distribution of
financial advice to private individuals. Through the RDR the FSA intends that
providers' - from IFAs and Fund Managers through to Private Banks and
Insurers - traditional business practices will be challenged on areas such as
remuneration, accountability and professional standards.
Following the financial crisis, consumer confidence has been visibly
shaken as the FSA looks to reassert itself as the champion of investor
RDR represents a major investment for the industry as a whole. The new
standards and procedures around professionalism alone are set to cost firms
in excess of GBP150 million, according to the FSA's own estimates - let alone
operational, technology and on-going costs after 2013.
Now firms across the board are investing heavily in RDR. Some global
banks have already undergone multimillion pound risk assessment exercises on
the costs of RDR, focusing on distribution at the retail end.
Capco, a global business and technology consultancy dedicated solely to
the financial services industry. Our professionals combine innovative
thinking with our unrivalled first-hand industry knowledge to offer our
clients consulting expertise, complex technology and package integration, and
managed services to move their organisations forward.
Through our collaborative and efficient approach, we help our clients
successfully increase revenue, manage risk and regulatory change, reduce
costs and enhance control. We specialise in banking; capital markets; wealth
and investment management; finance, risk & compliance; and technology. We
serve our clients from offices in leading financial centres across North
America and Europe. To learn more, visit our web site at capco.com.
Contact: Robert Akam, T: +44(0)20-7400-4480, E: rakam at hanovercomms.com; Joe Eldridge, T: +44(0)20-7400-4480, E: jeldridge at hanovercomms.com
Tags: Capco, February 11, London, United Kingdom