The Retail Distribution Review – What does it mean for you?
14 Dec 2012
By Matthew Kneller
You may have heard in the news and the weekend financial press that changes have been introduced to the way financial advisers can provide advice to their clients.
In this article we will look at some of the measures that have been introduced and how this will affect the advice that you receive.
The Retail Distribution Review (RDR) came into force with effect from 31 December 2012 and introduced four key changes.
Firstly, advisers must inform their clients whether they are giving ‘independent’ or ‘restricted’ advice. Financial advisers that provide ‘independent’ advice will be able to consider all types of investment products that might be suitable for you. They can also consider products from all firms across the market. Advisers who have chosen to offer ‘restricted’ advice can only consider certain products and/ or product providers.
Fresh Perspective will continue to offer ‘independent’ advice to our clients. We believe that being able to offer products from the whole market will lead to better financial planning outcomes. We already know, however, that a number of the larger financial advice firms will only be offering ‘restricted’ advice.
Secondly, financial advisers must now charge a fee for providing advice rather than take commission from a product provider. Fresh Perspective has always been a fee-based financial planning firm as we believe that this demonstrates that we are completely unbiased in the products we recommend.
Thirdly, all advisers must be qualified to a minimum of QCF Level 4 which means that they must hold at least the Diploma in Financial Planning. At Fresh Perspective, we take qualifications very seriously. Both Will and I are Chartered Financial Planners which means that we are qualified to QCF Level 6, and to a far higher level than the new minimum requirement (the difference between a diploma and a degree). We also take Continuous Professional Development (CPD) very seriously as we believe this is evidence of our professionalism. Fresh Perspective is one of only a relatively small number of firms that have been awarded corporate Chartered Financial Planner status. This reflects our commitment to excellence within the financial planning profession.
Finally, firms must demonstrate that they are treating their customers fairly. We have embedded this within the culture of Fresh Perspective. We put our clients at the heart of what we do and we act with integrity, honesty and transparency.
Second Opinion Service
The Retail Distribution Review has been introduced by the Financial Services Authority in order to improve the professionalism of the financial services industry. It has had a large impact on many firms and in particular some of the banks. It has had little impact on Fresh Perspective as we have been adhering to the principles behind the Retail Distribution Review since our inception.
One of the effects of the Retail Distribution Review is that some advisers have decided to leave the industry, for some it will be the impact of the ban on commissions to their business model and for others it will be because of the need to study for more exams.
Our concern is that our clients may have friends or acquaintances who no longer have an adviser. We would therefore like to extend to these people our second opinion service – if you would like us to meet with anyone you know who would like to review their financial affairs, please do let us know.
This article contains the current opinions of the author and does not represent a personal recommendation. Information contained herein has been obtained from reliable sources but cannot be guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission from Fresh Perspective Financial Planning Ltd.