Financial advice underwent a major change at the start of 2013, as the Retail Distribution Review (RDR) came into force on 31 December.
The review bans commission payments from companies for selling one of their products, with this commission ultimately clawed back through the consumer’s investment.
Under the new system, IFAs will have to make it explicitly clear what they will charge for the advice they give. Some advisers will prefer to charge a percentage. Others might select a fixed fee or offer an hourly rate.
Clients will select which payment basis is best for them. Some will pay the IFA on receipt of an invoice. Others may prefer the payment to be facilitated via an advice charge deducted from the amount invested.
We believe that with the RDR designed to create more transparency in the cost of financial advice, it will make it easier for consumers to compare the prices of advisers.
The increased transparency is expected to have a major impact on IFAs, with an AXA Wealth Survey published at the end of 2012 finding almost half of the seven million people in the UK currently using IFAs likely to drop them and go it alone when upfront charges come into force.
What will be the likely impact on the IFA’s themselves? From our research and from talking to a number of established IFA’s we understand that an estimated 25% of the total number of around 37,000 IFA’s are expected to leave the industry. That is over 9,000 IFA’s who will be looking to find other similar avenues or work, retire early or make a change of career.
Another consequence of RDR is that advisers have had to upgrade their qualifications. This means that consumers will know exactly what they are paying for and be getting sound advice from well qualified advisers.
Gateway is well equipped to meet this situation. Several of our consultants have worked closely with IFA’s in the past, as clients, and we offer a range of tailored programmes especially geared to helping IFA’s understand their career and job options and then make important career decisions. Gateway sees the impact of RDR as a positive factor for many IFA’s who can now look to a fresh career in a new field – something that they may never have envisaged 5 years ago. We believe that this could be the opportunity many IFA’s have been looking for and the exit strategy that changes their life for the better.
For more information please contact us by email at info@gatewaycareers.co.uk or on our web site https://www.gatewaycareers.co.uk/2022