Less than 17% of advisers have felt a notable impact on how they do business as a result of the government’s Retail Distribution Review, which came into effect at the beginning of 2013. Prior to January of this year, much had been made of the impact this regulatory change—which encompasses advisers switching to a fee-based payment model, the introduction of obligatory qualification levels and clearer labelling of ‘independent’ and ‘restricted’ advice—and the disruption it would cause the advice industry.
A Morningstar survey conducted at the Institute of Financial Planning’s recent annual conference revealed that just three of the 18 advisers questioned had seen the RDR bring about change in how they conduct their businesses. The remaining 14 advisers reported very little impact from the government’s change.
It’s worth noting that attendees to such an event are likely to be those advisers who are more progressive and forward-thinking, so being long prepared for regulatory change may be in the make-up. Indeed, one adviser said his firm had been “RDR-friendly for the last 17-18 years.”
Of those that did report an RDR impact on how they give advice, one participant celebrated the government initiative, welcoming the focus on fees and the opportunity for her firm to ensure they are adding value for money for clients. Another said it had been a steep learning curve but she now felt her firm was well positioned to cater to clients in the current market. In a turn up for the books, our final interviewee said the RDR had brought about the unexpected result of forcing his firm to increase its fees as they discovered they were charging clients just a third of what many other financial planners were asking. The fee increase has enabled his firm to expand the number of advisers they employed, he said.
The vast majority of those surveyed said they had been ‘RDR-ready’ for a number of years, with one noting that the process can take several years to achieve but that many firms started this process a long time ago.
Want to know more about RDR? Watch our RDR Basics video.
