Questions to help you make important decisions

Creating a new market structure

The introduction of a four tier approach to advice will mean you will need to decide what level of service you intend to offer your clients. To help you make this important decision and may consider the following questions:

• (If you are presently tied of 'multi-tied') If we are no longer able to call ourselves 'Independent', how will our clients react, what effect would this have on client retention and our future income?
• What steps can we take to reduce any impact?
• What would be the cost to us of not remaining 'independent'? (Balance the 'base risk' of not offering this service against the cost of advising on a wider range of retail products).
• Would a 'restricted advice' approach be suitable and acceptable for meeting some of our clients' needs and allow us to operate at lower cost?
• Could client segmentation and matching of services allow us to deal with more clients?

Adviser Charging

The following questions may help you to consider the how these proposals could affect your business and let you plan for the future:

• How will we deal with clients who have existing policies which cannot provide 'factory gate pricing'?
• What level of service or services would we potentially want to offer our clients?
• What will our remuneration 'menu' include and how do we explain the effects on product performance of any advice related deductions?
• What is the current 'income mix' of our business - is it likely that this will change significantly?
• What impact would this change have on our financial strength?
• What changes could we make now to allow for a smooth transition e.g. progressing to a recurring income model and moving away from initial commission?
• How could we protect our income streams in the future?
• How should we segment our client bank in the future to ensure that we offer the right level of service to the right customers and generate sufficient income?
• How will we ensure, through our communications, that we still treating our customers fairly?
• What changes might we need to make now to our current business model to prepare for the future? For example, reviewing and possibly changing our service offering, moving towards factory gate priced products ahead of the regulations and building recurring income streams.

Professional Standards

For many firms ensuring their advisers are able to obtain further qualifications could create financial and time strains on their business. The following questions may help you to plan ahead and limit the impact:

• The FSA will be expecting to see skills, knowledge, expertise, ethical behaviour and application of knowledge therefore what training needs exist in our organisation?
• Higher qualifications may be the biggest challenge - will we aim to have selected or all advisers meeting these new standards?
• How best can our individual advisers learn? For example, a combination of individual/group training, paper based distance learning and online modules
• What time and budget, if any, is available for this activity?
• How will we track progress and motivate advisers?