Karl Dines: Get to the party early
06 Feb 2015
In the second of a monthly series helping advisers prepare for the sunset clause, we look at getting started on the discovery stage.
I live in a village that holds an annual Pork Pie Festival, which is a well-attended affair and involves the odd pint or two. The problem of course is a bar built for 10 and 50 people requiring drinks: we all end up standing in the queue waiting to be served. I often wonder why I do not just get to the party early, get to the bar sooner, get the round in and then relax and enjoy the rest of the day.
But it seems to be human nature. We wait until the last minute to turn up and then we are in with the rush.
It is not just pork pies. If you think about the run-up to the RDR, a fair majority of businesses left it to the very last minute to start looking at what was necessary to remain in business, therefore getting caught in the rush to get things finalised. Unfortunately, we are seeing this late response again when it comes to the sunset clause.
If the sunset clause affects you, you should by now have your approach identified. It probably looks something like the four-stage process in the box-out (right).
If you have yet to start the discovery process, you are not alone. However, the longer you delay in commencing the process, the more other advisers will be ahead of you. These advisers will be utilising the resources of the platforms to get their own information requirements fulfilled. This means that the longer you delay in starting, the more likely it is you will experience delays in receiving the information you need as the demand grows for the limited resources of the platforms.
And here is one more thing to consider: how much time do you have between now and the implementation of the sunset clause? Unfortunately, you may have even less time than you originally thought. Two major players in the platform world have recently released statements - one aims to complete the conversion to clean share classes by this December and the other will “take the communications lead” in Q3 to ensure it complies with regulations by February 2016. This is outside your control but will directly impact upon your clients and also your revenue stream.
Do you want to get to the bar with 10 people waiting to be served or with 50? It might be wise to start this process now if you have not already done so.
So, consider platform assets and those that were in force prior to the start of RDR, which may not now be your preferred investment vehicle. All platforms should be able to assist you in this and in most cases information can be sent to you digitally.
You should be in possession of basic client details such as name, policy number, type of policy and fund value. In some cases you may also have a mix of investment vehicles under differing conditions:
- Some are already under adviser charge (sometimes called explicit)
- Some under commission (sometimes called implicit)
- Some that hold solutions in both charging regimes
It is important to note this mix when considering which assets are affected.
Make sure, once you have this information, it is logged accordingly as there may be several sources that could cross over from client to client. In addition to this basic information, it would be wise to also ask for details relating to the charges on each policy identified, making sure it is client specific as this will be required when comparing charges. Get there early and you will be able to enjoy 2016.
Karl Dines is implementation consultant at Verbatim Asset Management
This article was originally published on www.moneymarketing.co.uk