From 1st January 2013, changes will be ushered in that affect the way YOU receive and pay for financial advice.
The Retail Distribution Review (RDR) is to be enacted on the 1st January 2013, but to date, 80% of UK advisers believe the general public knows nothing about it!
It is important to be informed about the change,as it will affect anyone wanting financial advice on savings, pensions, mortgages, insurance and investments.
The financial services sector has always been one of constant change – whether it be regulation, products, markets or the trading environment.
No matter what anyone says, advice has always been somewhat subjective - depending on the individual adviser's interpretation of the clients needs and risk profile and then the selection of the financial products that most closely fit that client's needs. Contrary to popular belief, financial advice in whichever form, has never been free! Although with all the hidden commissions and trail fees you could be forgiven for thinking that you got advice for free!
What are the latest changes? Watch our two short videos
to find out more or continue reading...
The main aim of the Retail Distribution Review is to make the financial advice services you receive more professional and comprehensive and to make the way you are charged for these services clearer and more transparent.
1) All advisers will have to operate under adviser charging - instead of the current system of commissions and /or fees, charges will be clear and transparent.
2) Every adviser will have to agree services and costs with their clients - a schedule of fees and charges will be agreed before any advice is given.
3) All advisers must obtain an appropriate Level 4 qualification, complete CPD and confirm adherence to a code of ethics - this is all very positive for the general public. It is aimed at bringing the standards of advice and adviser competence up to more professional levels.
What choices will be available once the changes are enforced?
Instead of the current confusion of tied, multi-tied, whole of market or independent advisers, we will go back to a simple distinction between the two camps of - the independent VS the restricted adviser. Some argue that Restricted is a negative word,but at least it makes it starkly clear that the advice on offer is constrained in some way. Independent will reflect much more what the term implies - independent advisers will have to offer the whole universe of financial products on offer, including products such as National savings,which would never have previously been considered by advisers working on a commission-only basis. So many of the advisers currently calling themselves IFAs (independent financial advisers) will have to step up their knowledge and research considerably to be allowed to continue using the IFA title in the post Retail distribution review landscape.
What will be the effect of the changes?
One thing is for sure, once the Retail Distribution Review comes into effect there will be another shakeout of financial advisers. Hopefully those that are left will be better qualified,better informed and more transparent in their charging methods. We at Pink Investments.Org believe we will see a huge polarisation - clients that can afford to pay for truly independent advice will do so. Those that can not afford the upfront fees will then have a choice between the restricted advice available from Banks, insurance companies and restricted advisers OR, we believe many will choose to go along a DIY route. With the advent of the internet it is possible nowadays to get access to financial information that used to cost thousands and was only available to sophisticated investors or financial institutions. Today, if you know what you are looking for, it is possible to do your own financial planning, for free and get just as good an outcome as you would have by employing a costly adviser. This is where Pink Investments.Org can help.
We know from feedback from our women readers, that most women shy away from DIY investing. But if you have access to pure unbiased, accurate information and have some hand holding and support along the way, then you are perfectly capable of doing your own savings,insurance,pensions and investing. This is exactly what Pink Investments aims to provide.