RDR an inspiration? It just might be.

It may not have quite the excitement of an assault on Everest, but we are looking forward to RDR causing some new opportunities and, dare we say it, providing some new inspiration to counter all the hard work.. and potential difficulties that have come along too.

Much has been made of the importance of client segmentation in a post RDR world and we’ve mentioned it recently, too. A lot of the advice including that from Scottish Widows  focuses on a matrix of adviser needs (levels of income per client) and client needs (types and level of service required).

This approach seems sensible:

  • It combines the needs of both the key parties in the relationship
  • It creates clear differentiation in your client base
  • It allows you to optimize your time – an ever more precious commodity post RDR


However, don’t be fooled into over-simplification.

One of the key reasons to review segmentation is the changes in fee structures under RDR. But this throws up its own challenges.

If we’ve been used to income being dominated by commissions from product providers, how can we be sure that those clients delivering high income today will do so tomorrow? Will the client who’s been happy to pay indirectly, be happy to pay £X per hour up front for our advice?

Some advisers will have moved to an advice based fee structure to pre-empt some of these issues, but will they have enough data to be confident in their segmentation conclusions?

From the clients’ perspective, a simple “what do they want?” model may lead us to answers that will be ineffective – client needs and wants will change post RDR as well.

It’s also wise to be cautious of getting too attached to a segmentation strategy, when the extent of change under RDR is certain to result in some outcomes that no-one has even thought of yet, but, to build on Dwight D Eisenhower’s “plans are useless, planning is indispensable” maxim, it is at least worth exploring some possibilities.

The answer almost certainly begins with accurate data. This is the critical foundation for both you and your clients and your data needs to be:

  • Accurate
  • Comprehensive
  • Historical
  • Flexible

And it’s that last one – flexibility – that’s critical.

Ideally, the first three should be straightforward and objective – flexibility is where intuition can be used and value can be added – turning data into management information and from there into an effective client segmentation strategy.

So what are the key questions you need your data to answer beyond the bare facts of FUM, income etc?

Well, every business is different, but the following questions seem a good place to start:

  • Where is a client in their financial lifecycle?
  • Where might other members of their family or friends be?
  • What gaps are there in their portfolio – are those gaps filled by other advisers or is the client missing them altogether?
  • Do you understand their broader financial needs (including borrowing requirements and other investments such as let properties)?
  • How much time will it take you to advise them in future?
  • Will they be prepared to pay for that time? And critically, how much?


You may be thinking there’s no way that data can answer all these questions. And you’d be right. But that’s the point.

It doesn’t make sense for advisers to spend the run up to RDR focused on the mechanics of segmentation, manipulating Excel spreadsheets and desperately trying to get clients into gold, silver or bronze boxes – if all the data they’re using is historical information from a different – pre RDR – paradigm.

So, instead, use the time to make sure that you’ve got the right systems in place to capture behaviour going forward and if you haven’t got the tools in your armoury to get your the analysis material you need to shape your business, get some help now.

Data is vital for clients – it tells them how you, and the funds they invest in, are performing, but it’s vital for you, too.  Unless you can adequately track customer behaviour, what hope do you have of responding to it.

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