In the latest in our series looking at coverage of the Retail Distribution Review (RDR) in the consumer media, we take a closer look at an article in the Daily Express.
The article doesn't quite get it right on adviser charging (it implies the customer receives free advice under a commission model), or on restricted advice (it suggests independent advisers must be able to advise on all financial products), but it does include helpful insight into the value of advice.
There is an unhelpful passage about advisers having to take exams under the new rules; which, of course, isn't true of a great many number of intermediaries.
It also says advisers will have to keep their knowledge up to date (via CPD), but neglects to state this isn't a new requirement.
The Daily Express offers its take on what RDR means for the public
Here is the article in full...
(let us know what you think using the comments section at the bottom or on Twitter @IFAonlineUK)
"When it comes to getting financial advice on pensions, investments, mortgages and protection, many are unsure where to turn or how much they should be paying for it. From January 2013, though, new rules on pricing are due to come into force and will effectively ban commission, the traditional way of paying for financial advice and products.
It is being replaced by a simpler and more transparent way of charging, with fees being stated explicitly up front.
Under the changes, consumers will also be informed about the type of service they are paying for and will benefit from a higher level of professional standards from their advisers.
The changes are part of the Retail Distribution Review (RDR), being implemented at the end of the year by City watchdog the Financial Services Authority (FSA). Given that awareness of RDR is still low, we take a look at what all this means for consumers and how to find good financial advice.
What do the changes mean?
At present, when you visit an independent financial adviser (IFA), you are given the choice of paying up front or through commission.
From January, however, you will have to pay for advice you receive yourself. The FSA claims this is a clearer and fairer way of charging as consumers will know how much financial advice costs and that the service "does what it says on the tin".
From January, however, you will have to pay for advice you receive yourself.
Commission costs will no longer be included within the charges of products such as investments and pensions, so will no longer have an impact on your eventual returns.
"The changes are designed to make the cost of advice more transparent and to help consumers better understand what kind of service they are being offered," says Mike Kellard from Axa Wealth. "The knock-on impact means that advisers must demonstrate the value of their services to their clients."
The hope is that the overall reputation of the industry will also improve.
"The new rules are designed to raise the quality of advice," says Scott Gallacher from IFA Rowley Turton. "They are designed to ensure all advisers act with integrity and that they treat you fairly."
This article continues...
Shone a light on 'closet trackers'
‘Documentation, documentation, documentation’
'It will have to lead with product intervention and product governance'
'Advice will be delivered in new exciting ways' - Iress