The start of 2013 marks the introduction of some major changes to our industry, although many won’t be felt by our existing clients.
Approximately six years ago the Financial Services Authority, in its role as regulator, started working towards what has become the Retail Distribution Review (RDR) with the aims of improving professionalism, knowledge and transparency within our industry. This objective culminates in the implementation of the RDR as of the New Year.
What do these changes mean for both us and our clients? They reach across all levels of our industry but some of the more noticeable ones are:
- All advisers will now need to have achieved a higher level of qualifications than previous. Although this doesn’t affect us directly (we have held the necessary qualifications for some time) it means some financial planners are moving away from qualified financial advice.
- The definition of adviser and the meaning behind the word Independent Advice (or what is described as Restricted Advice). Firms can elect to either operate in a restricted manner, offering advice on a ‘whole of market basis’ or tied to one or more providers or they can elect to operate on an independent basis. We have chosen to retain our independent status as we feel this offers the best outcome for our clients. We feel we can continue to ensure our clients needs are met by utilising the best financial products, funds or providers as dictated by their needs and desires.
- How we are paid – commission on new investment-related plans will no longer be offered and this will be replaced by adviser charging. In reality there is little change for our existing clients and the majority of new clients because there have always been costs for advice. Previously these have been associated with plan charges and commissions; the costs will now be explicit and clearly demonstrated. We have always prided ourselves on not being swayed by varying commission from providers and have consistently maintained our fee costs in line with any commissions so that clients clearly understand the costs of advice. This will continue and as previously you will have the choice as to whether to pay our fees direct, or whether those fees are paid by the provider and the costs to be deducted from the investment product or plans.
- Greater accountability for ongoing advice and looking after those existing clients whose plans and situation we review on a regular basis. This is a major step forward for our industry and is certainly something we welcome. The majority of our business is built around our existing clients and maintaining their investments so we welcome the opportunity to demonstrate our value to both our clients and the FSA. It will be a positive move for the industry as a whole if it moves to a similar focus of looking after their existing clients.
In short the RDR changes are very welcome news for Platinum and will result in a better industry and better outcome for all consumers. However there may be some disruption over the initial few months of the new legislation and I would urge our clients not to panic when the media starts to focus disproportionately on specific parts of the legislation which can create concerns.
We are here to help and if you have any queries at all, please do not hesitate to get in touch.
There are other changes and effects of the RDR which will filter through over the coming 12 months but the above are the most headline-grabbing. Rest assured, we will continue to monitor all our clients investments and keep you informed as to any actions which may be required.