Transcript Understanding the Sunset Clause

FOR PROFESSIONAL FINANCIAL
SERVICES INTERMEDIARIES ONLY –
NOT TO BE RELIED UPON BY ANY
RETAIL INVESTORS.
Understanding the Sunset Clause
Karl Dines : Implementation Consultant
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Learning Outcomes
Understand the content of Policy Statement
PS13/1
Understand the consequences of PS13/1
Recognise the need to develop a robust system
which will facilitate a move to adviser
charging for existing clients
Recognise the importance of developing a
solution and best practice regime to deal with
the run up to The Sunset Clause
We’ve seen this before
1990s : Hard disclosure
1994 : Abbey Wrap, Cofunds
and others
2007 : RDR discussion paper
2013 : Adviser Charging
2016 : Sunset Clause
2 lessons learned
1 question to answer
Legacy Commission
Policy Statement PS12/3
No further commission
on new investments
Trail continues
No change to product
Automatic changes
Fund switch within a product
PS13/1 high level
Rebates cease
Logistical issues
April 2016 : Sunset Clause
PS 13/1 in more detail
Issued April 2013
Consultation Paper 12/12 : FCA intent to
prevent platforms from being funded by
payments from product providers
PS 13/1 in more detail
FCA response to CP12/12 consultation :
We continue to believe that the best way of improving transparency in the
platform market and removing the potential for bias is by ensuring the consumer
pays a platform charge to the platform for the service provided. Consumers
currently pay for platform services, albeit in some cases through their annual
management charge. Making this clear to the consumer should help both
consumers and advisers to compare different platforms and make a value-formoney judgement on whether a particular service is suitable. It will ensure
platforms design their offering with the consumer paying for the service in mind,
rather than designing a service that best meets the needs of advisers or product
providers.
And that means....
The customer pays for the Platform services they use,
the platform provider designs an offering for the
customer
PS 13/1 in more detail
S2.4 states platforms can only receive
remuneration from the retail client
For legacy business there are ‘operational
challenges’
Retain these payments subject to a two year
Sunset Clause, after which platforms cannot
retain rebates
5 April 2016
The fund charge shift : Pre Sunset
Client Charge
Fund charge to fund manager
Rebate to Platform
Commission to Adviser
The fund charge shift : Post Sunset
Client Charge
Fund charge to fund manager
Platform charge to Platform
Adviser’s responsibility
Adviser charge to Adviser
Pre RDR income model
INCOME
Platform
commission
Non platform
commission
RDR
Post RDR income model
INCOME
Platform
commission
Platform
adviser charge
Non platform
commission
RDR
SUNSET
Post Sunset income model
INCOME
Platform
commission
ceases
INCOME
Platform
adviser charge
Non platform
commission
SUNSET
The Opportunity
INCOME
Discovery assets
adviser charge
INCOME
Platform
adviser charge
Non platform
commission
NOW
140 DAYS
SUNSET
Working with the Sunset Clause
Panacea snapshot poll Dec 2013*
Will the removal of trail commission have a
negative effect upon your business?
* Preparing for Life After Trail : May 2014. 1749 IFAs surveyed
No, not at all : 1.8%
Yes, a little : 2.2%
Yes, a lot : 4.1%
Yes, catastrophic : 91.9%
Working with the Sunset Clause
Panacea Spring Survey January 2014*
Is your business ready for Trail?
* Preparing for Life After Trail : May 2014
Yes : 11.7%
Almost : 6.6%
Not yet, but will be : 30.7%
No, I have no idea where to begin : 51.0%
Where to begin
Focus on what is urgent
Are you prepared?
Four Stage Process
FOUR STAGE PROCESS
Discovery
Identification
Comparison
Implementation
4 Stage Process : Discovery
Record value of assets from all sources
Contact existing providers for MI and charge and
non-charge information, including fund values
and surrender values
FOUR STAGE PROCESS
Discovery
4 Stage Process : Identification
Segment client data. Priority may be given to
those assets affected by The Sunset Clause.
Prepare client contact plan
FOUR STAGE PROCESS
Identification
4 Stage Process : Comparison
Prepare client specific comparison
Identify those that will benefit from migration,
those that require further research, those that
would not benefit from migration
Construct a pre approach
written document
FOUR STAGE PROCESS
Comparison
Arrange meetings
4 Stage Process : Implementation
Obtain client consent to proceed
Use Existing Practices to:
record factfind
analyse client’s attitude to risk
recommend a move to adviser charged platform
apply your Centralised Investment Philosophy
Execute move to adviser
charge
Suitability report and
document.
FOUR STAGE PROCESS
Implementation
Consider a streamlined approach
Project Planning
Export and import client data
Efficient risk profiling
Build team of suppliers to match investment
philosophy
Reduce administration by integrating platforms
Financial Planning and Suitability reports
Case Study
Established Wealth Manager
6 advisers / 2 Paraplanner
Cofunds main platform, a few secondary platforms
Client proposition in place
Centralised Investment Proposition in progress
Platform due diligence work in progress
Case Study
Support from Verbatim
Designing a Centralised Investment Proposition
and support on platform due diligence
Stress testing Client Proposition
Hands on support to fully utilise Dynamic
Planner
Practical support in all areas
Practical Support
Case Study
Outcome
Discovered £3.5m pre-RDR assets on platform
Identified potential income loss of £17,500pa
Designed project plan to move to adviser charging
Established robust, repeatable and independent
process for future platform cases
Risk/quote/apply/trade within Dynamic Planner
Learning Outcomes
Understand the content of Policy Statement
PS13/1
Understand the consequences of PS13/1
Recognise the need to develop a robust system
which will facilitate a move to adviser
charging for existing clients
Recognise the importance of developing a
solution and best practice regime to deal with
the run up to The Sunset Clause
In Conclusion
The Sunset Clause could reduce income to your
business.
Protect your income, but remember the discovery
element.
There isn’t much time, act now. Concentrate on
what is most urgent.
Contact for support
Complete your feedback form and hand in to a
Verbatim representative
Contact Adviser Services:
0844 967 0945
or
[email protected]
Contact your Regional Development Manager
FOR PROFESSIONAL FINANCIAL
SERVICES INTERMEDIARIES ONLY –
NOT TO BE RELIED UPON BY ANY
RETAIL INVESTORS.
Understanding the Sunset Clause