Just as life on earth went on in spite of the Mayan prophesy that the world would end in December, RDR-Day's arrival in January passed
without disaster striking the wrap and platform providers nor the Financial Planner customers who use them - for the time being at least.
There was the odd hiccup, notably with Alliance Trust, whose clients had their choice of funds available for purchase on its platform abruptly, if temporarily, restricted because the firm had failed to finalise its charging terms on clean share prices with scores of fund managers by 2 January. But other than that, planners report that it is largely 'business as usual' with their daily activity and dealings with their platforms.
On the whole, the wrap and platform providers, who now have more than £205 billion in assets under administration (up eight per cent on the previous year), according to industry group Platforum, had completed the lion's share of their preparations for RDR during 2012. The most proactive were in constant touch with Financial Planners about their needs, especially relating to new share classes and pricing models.
This year will see plenty of action as the months pass, however, as the models are adapted and investment offerings expanded, pricing tweaked and platform technology upgraded to respond to RDR as well as the gathering clouds of increased competition. Ascentric, for example, is already devising how it can make its offering more friendly to advisers and is looking for a platform technology partner to overhaul its user interface and possibly its back office systems too.
Philip Dodd CFP^CM, a Financial Planner at MoneyGuidance, believes the new dawn means Financial Planners will be paying even closer attention to pricing and due diligence on platform choice this year. He said: "Platform pricing is moving in the right direction as a result of so many players in the market rather than just RDR although I haven't witnessed any eye-openingly fantastic new charges recently. They are probably as low as they can go and so I expect consolidation over the next two or three years as the smaller platforms get taken over."
Nick Lee, head of corporate relationships at AXA Wealth, believes that the first big steps into the new RDR world have been relatively straightforward, with the provider requiring just a "bit of tweaking" of the software to meet new commission ban rules. He said: "Pre-RDR, the platform had bundled and explicit (pricing). This just needed a few tweaks and the terms and conditions updated."
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More uncertain in Mr Lee's view is the next stage, thanks to delays over the implementation of the FSA's platform paper which sets out a ban on cash rebates on investments, a move that AXA believes is detrimental to customers as it sees them as a more practical way to discount the cost of investments bought on platforms. He explained: "The biggest challenge is 'RDR 2' and getting clarity on rebates. AXA's view is clear that rebates are positive and should be retained and that the client decides what to do with them." The platform has also been enhanced to offer a fixed term deposit account to make cash easy to administer.
The planned ban remains in some doubt as the FSA mulls over the potential implications following an industry consultation in late 2012.
An FSA spokesman confirmed that the platform paper will be published in the next month or two, once issues, especially related to the taxation of rebates are clarified. She said: "When that goes out it will (provide) the final rules. Firms will have a good deal of time to get ready. Originally they were to have until January 2014 but the actual date will depend on when the paper goes out. We are going through the responses and we have been talking to the HMRC about tax implications. We want to get it right for everyone and achieve what we want to which is to make sure the market is transparent when it comes to charges."
At Standard Life Graeme Bold, director UK Retail RDR, remains patient. He said: "While on one hand we are keen to get clarity from the regulator as soon as possible, on the other we're pleased that the regulator is taking time to understand the potential customer detriment involved in such a significant change."
Malcolm Murray, marketing manager at platform Transact, is unconcerned. He said: "We were expecting rebates to be banned so it's now just on hold. We can make updates to our software very quickly with our team of 42 systems designers."
As for the main RDR changes already implemented, Mr Murray believes some fund managers have overplayed the effort involved in providing clean share prices. He said: "Not every fund manager could get its head around the clean share price issue. Some of the smaller ones weren't sure what to do. But the asset was ostensibly there already. They always offer institutional classes of shares so just needed to offer them to the platforms. Sometimes all they needed to adjust was the minimums that can be invested."
Carl Lamb, Chartered Financial Planner at Almary Green in Norfolk, which has been new model and RDR ready for some time, describes the post- RDR world as "business as usual." Platforms play their part in this world but he cautions that they "aren't for everyone." He described them as "just technology" and that they often simply create an extra layer of costs. He said: "They have a role. We use Skandia, Ascentric and a little AXA Elevate and Cofunds for certain circumstances but you need to add up all the costs. The difficulty can be drilling down to the true costs." He believes pricing will be a key driver for Financial Planners using platforms this year as they hunt for the best value propositions.
Financial Planners are certainly taking platform due diligence seriously, according to Mr Murray, as rising numbers have been approaching Transact recently with more detailed questions than usual. However, he is optimistic that planners are focusing more on the quality and breadth of services rather than just on price. He said: "It's hard for (a platform) to provide full functionality and be the cheapest."
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Mr Lamb, like others, believes that the downward pressure on pricing will have implications for the platform industry. He said: "In the second half of the year we may see some fall out as (platforms) need to run profitable businesses." Mergers and takeovers will certainly feature this year, he said.
Standard Life's Mr Bold agreed that costs will be a growing issue. He said: "The key pressure on advisers post-RDR will be demonstrating and increasing the value they deliver to their clients, and we expect this pressure to be passed on to platforms. This means a greater focus on how they enhance the client experience and investment outcomes, at the same time as minimising adviser costs and risks. As part of this, we expect the move to centralised investment propositions to continue - the ability of a platform to support this will be critical to their long-term success."
Chris Holmes CFP^CM at Alan Boswell Chartered Financial Planners in London, who also says it is "business as usual" for the firm, believes fund manager charging could be a thorny issue for many in the new world. He said: "There is a bit of a concern that some fund managers are still charging up to two per cent Total Expense Ratios and beyond. For some clients that is justifiable but for other clients there will be other solutions."
The firm's advisers make use of a mixture of platforms including Ascentric, Standard Life and occasionally Cofunds. Mr Holmes said: "We're having discussions with the main providers about services and how to deal with a broad cross-section of clients."
Mark Chandler, of Financial Planners Ellis Bates in Harrogate, which uses various platforms but for the past six years has been closely aligned to Transact, said: "RDR has not been a big do for us. We have been fee-based and highly qualified for years and we've completely unbundled everything so clients can see the charge for advice, for the model portfolios (called Utopia) and the platform charges." He added: "What we do say to people with less than £100,000 portfolios is that this is the service and what we need to charge and tell them we don't think we can add value for less."
Standard Life, which has been RDR-ready since October 2012, says that 2013 will be a busy year. Mr Bold explained: "We are making major investments in the platform during 2013, with plans to enhance our adviser charging capability as well as deliver a leading solution to the FSA's platform rules."
Like many providers he says a priority will be helping advisers manage the practical issues of RDR transition. Mr Bold added: "We expect this to change as the market settles and advisers can move on to more strategic concerns such as their choice of platform provider."
Standard Life added that it plans to keep improving its proposition for Financial Planners. He said: "We will be looking to attract high quality firms to the platform through the delivery of support for a wide range of sophisticated centralised investment propositions. Together we expect this to drive continued growth in assets under administration, from the current £13.8bn (as at Q3 2012) on our platforms."
AXA is also working on closer ties with Financial Planners, with a strategic aim of being the secondary platform choice. Mr Lee added: "This year we will see the integration with advisers back office platforms to help make their lives easier. The larger adviser groups in particular will want to drive more efficiency." He agreed that due diligence "is bubbling to the top" on platform choice as advisers adapt to the new regime and the FSA's guidance that a single platform is not enough in the post-RDR world.
No Mayan doomsday disasters maybe but RDR will keep the platforms and their clients busy during 2013 and beyond. Mr Dodd probably speaks for many Financial Planners - and providers - when he said of the five-year build-up to RDR: 'I am weary of change. I just want to batten down the hatches and get on with playing on the field we have'.

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