There’s a revolution coming to financial advice: the Retail Distribution Review

Steve Weisner - Independent Financial Adviser Radcliffe & Newlands

For the last 1 18 months or so the Financial Services Authority (FSA) has been conducting the Retail Distribution Review (RDR). The RDR final proposal is published and implementation will take place over the next three or four years. It brings with it sweeping changes in the way financial advice and products will be delivered – and some of those changes are really good news.

The RDR will help to raise professionalism in advisers through higher qualification levels and new standards for ongoing professional development. At the moment, the best advisers display the same professionalism as, for example, the legal or accountancy industries whilst the worst are simply product salespeople and there is no easy way for a prospective client to tell them apart. In the future the worst advisers will be forced to leave the industry or learn how to do the job properly.

Unfortunately, the banks have lobbied successfully to remove the proposal that only IFAs could provide “Advice” and that everything else would be called “Sales”. What we are left with looks someway short of the clarity that is needed, whereby people are in no doubt about what sort of services they will receive. The proposed structure
is now: 

• Independent advice – that’s us; 
• Sales services, which will include: Non-independent advice; Guided sales; Non-advised sales.

Banks are likely to offer the non-independent advice category. The influence of European directives means that the FSA will find it difficult to prevent the banking community from calling their services advice. The challenge will be coming up with “labels” that make it clear to people what they will get for their money.

The RDR also addresses potential bias caused by the different commission rates provided for similar products. This involves something of a shift away from allowing product providers to set their own level of incentive to encouraging advisers to charge a certain fee regardless of which product is selected. Further, the FSA proposes to ensure there is a clear distinction between which elements of a product charge relate to the cost of the product (administration, fund management etc…) and which relate to advice. Their rationale for this is that it will improve consumer awareness that independent advice has a value and corresponding cost. They expect to introduce these new rules in 2011.

All of this represents something of a revolution for much of the industry. For our part, we have been developing
an enhanced financial planning service over the last year that goes far beyond the requirements of the RDR and places us firmly at the forefront of modern financial planning.

Existing clients may already have noticed some changes to the way we work as we have introduced various parts of it already. Soon the full service will be live. We’re so pleased with it we’ve given it a name: the Clearbox financial planning service.

ClearBox

Financial planning is the process of developing a strategy to help you manage your financial affairs so you can build wealth, enjoy life and achieve financial security.

With proper financial planning it’s not the economy you have to worry about.
Here are the 5 biggest threats to your financial security: 

1. Not establishing your true goals in the first place. So you’re not really planning. 
2. Not having a plan (for which you need the right goals). 
3. Failing to review your plan. 
4. Not really understanding what you have and whether it’s appropriate or not. 
5. Procrastination.

Every day you delay makes it harder to achieve your goals.

Steve Weisner
Independent Financial Adviser
Radcliffe & Newlands
5th Floor Crystal Gate
28-30 Worship Street
London
EC2A 2AH  

Tel: 020 7382 0437
Fax: 0207 374 0462
Email: SWeisner@myeggnest.com
www.rad-new.com

If you have a question or if you would like to discuss becoming a client with Radcliffe & Newlands then do please complete the very short form on the right hand column of this page.

You will usually get an answer within 24 hours except during the weekend or bank holidays.

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