8th December 2010
The changes are all due to come about under the Retail Distribution Review (RDR). It comes into effect in January 2013 with the aim of transforming how consumers get access to independent financial advice.
As well as changes to how financial advisers will be paid for their advice, there will be new rules on how firms describe their services to consumers and a whole raft of qualifications for advisers to sit before they are deemed eligible to give savers and investors advice about their money.
Describing the scope of the changes, Jon Pain, from the Financial Services Authority has said: "The RDR is about regaining consumer trust and confidence in the retail investment market, building a more sustainable sector and making it easier for people to find their way around and get the help they need – this is more important now than ever before."
According to a new survey by independent research company Defaqto, 33% of advisers say they feel fully prepared for the changes ahead. That's a modest increase from 21% who felt similarly confident a year ago.
Jason Butler, partner at Bloomsbury Financial Planning , says the changes will be a win-win for consumers and advisers alike.
"I can see a great future for independent financial adviser firms who deliver a truly client-centered service. For customers I think, if they can find one of the progressive firms with spare capacity, they will be able to experience service and advice which will give them the best chance of achieving their goals."
According to the survey of 500 financial advisers, two-thirds of advisers are taking steps to enhance their qualifications, compared to just over half (52%) in 2009. While the proportion of IFAs who admit to doing nothing to gear up for the RDR has reduced significantly to 6%, from 18% in 2009.
Defaqto's Matthew Ward, says: "The next two years are going to be extremely challenging for IFAs as they seek to prepare for the RDR, and there has been a great deal of speculation about how it will affect the size and shape of the adviser community. However, our findings show very encouraging signs that advisers are stepping up their preparations for 2013."
Of course it's reassuring to know that more IFA's are stepping up their preparations for 2013. But consider two facts:
a) Only One-third of IFA's feel ‘fully prepared' for RDR, whereas
b) Two-thirds are just ‘taking steps to enhance their qualifications'
RDR will change the advisor landscape for good, and despite their efforts, it seems many IFA's might not be ready in time.