1st January 2013 will see the biggest financial regulation overhaul in generations, which will impact the way that individuals receive financial advice. The Retail Distribution Review (RDR) establishes an effective and attractive investment market so clients have confidence and trust, at a time when more help and advice is needed.
The changes apply to every adviser across the retail investment market, including independent financial advisers, wealth managers and stockbrokers; as well as banks and other providers of financial products.
A New Definition of “Independence”
An independent adviser must still consider all options free from any restrictions or bias whereas a restricted adviser will be limited to a range of products or select group of providers.
Simplified and basic advice covers a narrower product range with lower qualification requirements. Non advised sales from comparison websites are raising concerns of investors buying totally unsuitable investments without appropriate consumer redress, which independent advice provides. Additionally, the status of the firm and adviser must be disclosed.
Financial advice has never been free, whilst many firms still operate mainly on commission, these commission payments from providers on pension and investment products will be banned with advisers requiring to levy fees, agreed and disclosed at outset.
Fees can be deducted directly from the investment or pension in exchange for cheaper product charges. Tax relief’s on pensions makes this an attractive option to settle fees.
New higher professional standards are being introduced, ensuring consumers benefit from a more consistent and higher level of expertise. Existing advisers who fail to satisfy the higher qualification benchmark will not be allowed to practice after December 2012.
Chiene + Tait Financial Planning Ltd firmly believe that financial advice should be independent, unbiased and not driven by commission. Our advisers are already qualified beyond the new minimum standards; we are retaining our independent status and strongly support the merits of RDR in raising overall professional standards in Financial Services.
If you would like an initial, no obligation discussion, Please feel free to contact Gordon Birrell on 0131 558 5800 or email email@example.com.