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Skandia: RDR will reduce cost of PI

by Michelle Abrego on Dec 04, 2012 at 12:47

Skandia: RDR will reduce cost of PI

The retail distribution review (RDR) will significantly reduce the cost of professional indemnity (PI) insurance, according to Skandia.

Speaking at a Marketforce conference on the future of distribution, Skandia marketing director Nick Dixon said RDR would result in a better financial services industry, with well-run firms set for lower PI premiums and other regulatory dividends.

'With RDR the industry should become a cleaner place...it will reduce inherent risk and bring PI costs down,’ he said. ‘We might also see regulatory dividends for advisers that are well run and low risk.'

Dixon said PI premiums would not be the only thing to fall as a result of the RDR.

He said the greater transparency bought about the RDR would squeeze fund manager prices and platform charges to fall.

He added that falling prices for other parts of the value change would also eventually cause lower advice fees.

'Advisers are in the more resilient position but they are not immune. If everyone else's fees come down to around 30 basis points (bps) it will be hard for them to justify 100 bps.'

8 comments so far. Why not have your say?

Jonathan Kirby

Dec 04, 2012 at 13:40


I will believe it when I see it.

Our costs go up inexorably along with the workload.

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Dec 04, 2012 at 13:59

We had 4 brokers fighting over our PII renewal this year, managed to shave a third off last year's price.

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Dec 04, 2012 at 13:59

Well, its nice to hear a positive view of the potential impact of RDR but lets get real here, costs only go one way and thats up. If commercial pressures push down platform fees, fund manager and/or adviser fees will increase to fill the gap. The overall take will still be about the same going forward. As far as PI goes, as Jonathan says, I'll believe it when I see it.

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Dec 04, 2012 at 14:06

and as for 'lower advice fees' - these are more likely to have to go up!

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Julian Stevens

Dec 04, 2012 at 14:18

Has he been to an early Christmas party and smoked a few thingies that perhaps he shouldn't have?

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Derek Gair

Dec 04, 2012 at 14:20

Nonsense - No it won't

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Graeme Ferguson

Dec 04, 2012 at 15:37

The day I listen to Skandia with this waffle will be a sad day.... what a load of tripe! PI insurance will not come down and if it did it would need a claims period to justify so lets have this talk again in 10 years time.

Sure Platforms will have a mini price war, however due to RDR and the need for service IFAs will not flock to the lowest fee position...they will need service and accountability....and they come at a cost!

As for adviser fees, well you will either focus on a differentiation of service which denotes higher fees or on a cost focus... if you want more you pay for it....just like quality of leather shoes!!

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A Childs View

Dec 04, 2012 at 16:42

Poppycock. So pre RDR sales just disappear on 31/12 and the liabiliy for these will simply vanish into thin air will it?

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