Introduced in January 2013, the Retail Distribution Review (RDR) seeks to address the lack of consumer confidence and trust in the retail investment market and ensure consumers;
- Receive advice from highly respected professionals
- are offered a transparent and fair charging system for the advice they receive
- are clear about the type of service they receive
Key changes include
- Standards of Professionalism – introduces higher minimum levels of adviser qualification and evidence of ongoing continuous professional development
- Status of Advice – establishes clear distinctions between “independent” and “restricted”
- Adviser Charging – product providers can no longer pay commissions and advisers can only charge ongoing fees for an ongoing service
- Investment Platforms – must deliver transparent charges and greater efficiency of service
- Higher Professional Standards – The minimum qualification for advisers will be QCF level 4 (the Diploma). All Chartwell advisers hold the Diploma along with further specialist qualifications, training and relevant experience ensuring robust client advice and ongoing support is considered “standard service”.
Status & Type of Financial Advice
Defined as “a personal recommendation to a retail client in relation
to a retail investment product where the personal recommendation provided is based on a
comprehensive and fair analysis of the relevant market and is unbiased and unrestricted.”
Includes all forms of advice which don’t meet the ‘independence test’,
but must meet the same suitability, adviser charging and professional standards as independent advice.
Chartwell will continue to offer full Independent advice as many of our clients require
a wide breadth of advice and access to financial products and services, both currently
available and those that will evolve in the future.
Paying for advice
Product providers will no longer be able to pay initial or trail commission on new products. This will be replaced by Adviser Charging. All financial advisers will now have to outline and agree fees for their advice in advance in clear disclosure documents that help customers understand the services being provided along with the cost and value of advice.
Chartwell are already a fee based financial adviser and already meets the requirements. Clients will see no significant change. For over 5 years we have offered two methods of paying for our service – a direct fee payable by the client, or deduction of the cost of advice from the investment or pension product.
How might RDR affect you?
We feel that many of the legislation changes being introduced from January 2013 are already being offered by your Chartwell financial adviser. In fact, we are confident that we have exceeded these standards for several years, as we strive to deliver consistent high levels of advice and client service. If you wish to meet, we would be happy to discuss and agree these changes, how we are paid and what services we will provide.