Industry survey on the Impact of the Retail Distribution Review

What will it mean for your business?

IEA Annual Conference on The Future of Life Assurance

Bruno Geiringer - 14 May 2009

Pinsent Masons’ Survey on RDR Proposals

• What does the market think?

• Executive Roundtable January 2009

• Commissioned market researchers McCallum Layton and management consultants Wheeler Associates

• 130 interviews during February / March 2009

• Participants in investment, life and pensions, wraps/platforms and IFA industry

• Additional commentary from Pinsent Masons’ team

• Full report released today

RDR Survey Questionnaire

Will the RDIP / RDR proposals:

• address root causes of problems?

• provide clarity for consumers?

• build trust and confidence?

• attract new talent into advice side?

• increase savings / investment?

• provide business opportunities?

• increase financial capability?

High level Results from the Pinsent Masons’ Survey

• Level of satisfaction with the RDR

• Has the FSA met its four main objectives?

• To deliver fairer outcomes for consumers

• To modernise the industry

• To give consumers more confidence and trust in the industry

• To encourage more people to save for their retirement

Satisfaction with the RDR

Clarity of terms - to respondent

Clarity of terms - to the general public

Impact of Adviser Remuneration

Adviser charging will increase consumers’ level of trust in the industry

Impact of Adviser Remuneration

Impact of the new charging regime on consumers seeking independent advice

Tariff structures

Tariff structures likely to be offered

Achievability

How onerous will it be to split products and advisory costs

Achievability

How prepared to separate out product and advisory costs

Business opportunities – Better Outcomes

The RDR, Money Guidance and Personal Accounts will deliver better outcomes

The objectives of the RDR – Impact for Consumers

The FSA Objectives

• To deliver fairer outcomes for consumers

• To modernise the industry

• To give consumers more confidence and trust in the industry

• To encourage more people to save for their retirement

Our survey shows that the respondents believe that the FSA has failed to deliver on all of these objectives!

Emerging themes from Market Research Report

• Industry critical of RDR with IFAs showing least level of

satisfaction

• Independent advice for most affluent only

• Industry likes Money Guidance but won't be paying for it!

• Adviser Charging will lead to reduced demand and supply of

independent advice

• Professional standards a good thing

• Banks viewed as the biggest winners

• Combined effect of RDR, Money Guidance & Personal Accounts

in 2012 won't deliver better outcomes for consumers

What are the business opportunities for firms?

The platforms

• Winners but not all of them• More modern technology• Adviser Charging done at wrap level• Are single provider platforms compatible with new definition

of independent advice?• Does this mean multiple platforms at cost of single customer

view?• Single provider platforms giving wider access to other

providers? • Changes in ownership?• Aggregated data models or “platform of platforms”?

The IFAs

• Clear definition of independent advice – “ the gold standard”

• Professional standards – quality and trust• Higher capital adequacy – little real impact• Commission ban• Implement Adviser Charging – new pricing models• Opportunity for slick trusted brand in core market? • Read across to protection and mortgages• Need FSA steer on ownership by providers

What are the business opportunities for firms?

The Sales Advisers

• Too complicated?• Restricted adviser?• FSA and FOS guidance needed on acceptable standard

of advice

The Fund Managers

• Products completely unsuited to differentiate product and advisory charges

• Multiple streams of fund prices• Distribution limited to via the platforms

What are the business opportunities for firms?

The Banks

• Widely predicted to be amongst the winners• Have access to data of current account holders• Threat to other players• Ideally placed but do they have the appetite and…• Lots of other more pressing things on their minds!• UK tax payers want their cash back

What are the business opportunities for firms?

What are the business opportunities for firms?

The Life Companies

• Older style and unit linked products more resistant to transparency requirements

• Could see closing of old blocks of business• Possible re-emergence of direct sales forces?• Significant systems changes, alongside Solvency II and

Personal Accounts – the 2012 perfect storm!!

Summary

• Most significant regulatory changes for the distribution of investment products in a generation

• RDR Report includes commentary and views from the industry on implications of the RDR proposals from life companies, banks, wraps and platforms and competition law

• RDR Report includes Pinsent Masons’ expert assessment of survey results

• Report published today

• Register to receive your copy of the Report at our stand