Most, if not all, readers will be only too well aware of the changes that will take place from January 2013 within the financial services industry.  Much of what has been written has tended to concentrate on examinations, whereas in fact there is much more in RDR than just the new syllabus (or should I say revised?).  However, I wonder how many people have really grasped how behaviours will have to change from 2013 and how skill sets will need to adapt.

If RDR is applied in full, independent financial advisers (IFA) will be required to discuss remuneration for their services before starting the initial meeting.  This may be quite a different approach to the current modus operandi for many IFAs who may take commission almost as an accepted part of the business model.  Of course, the client may not worry too much as they do not have to physically pay out of their cheque account.

That said, under the proposed regime, it may lead to some interesting discussions between advisers and clients.  From outstet the adviser will need to know what their offering includes and what optional chargeable activities are on top of the standard fee.  As an example, the standard fee may include the initial meeting and subsequent report but will it include telephone queries over the year or valuation time?  It is not the intention in this article to concentrate on this aspect because there are other experts in the field, such as Brett Davidson of FP Advance.  However, unless the adviser truly understands his/her offering and what is included, it may be difficult to pitch for business.

Within the adviser's knowledge base, there will be information learned over many years and, if successfully examined, will enable the adviser to hold the designatory letters DipPFS (see the CII for details www.cii.co.uk ).  But what will these, or any other industry letters mean to the general public?  Many IFAs conduct transactional business and I have no doubt that the letters are used as a sign of professionalism.  The point is that in the near future it will take more than letters to persuade a client to part with cash for financial advice unless the adviser can prove they are worth it.  The offering is the advice and not the product.  It may be that as an industry we must move towards true financial planning to substantiate our fee rate but even this will not enable the adviser to obtain a fee unless he/she can sell the service to the client, which up until now may not have been necessary.

The real challenge for advisers is how to negotiate with clients.  I do not mean horsetrading but a genuine converstaion about fees, baseline offerings and additional services which attract a premium level of fees.  Negotiation is about persuading the client that the service is valuable not the product.  In addition an adviser must persuade the client why he or she is better than anyone else.  And this is the issue.

If a client is faced with a fee structure they will want the best that that money can buy which in financial services terms means knowledge and how to apply it.  Qualifications are not to be held here as a holy grail, but they will undoubtedly help a client to see value in the offering.

Here at P.R.I.S.M we offer a range of learning programmes which aim to develop negotation skills in a financial services profession.  To find out more, contact Geoff Gaunt on 01324 832820 or e mail to This e-mail address is being protected from spambots. You need JavaScript enabled to view it