Plymouth-based Financial Management Services has seen five staff walk out because they found the the fees structure required by RDR 'unworkable', according to managing director Ken Hayden.
There are three remaining staff at the firm, Paul Freeman, Stuart Southworth and Hayden himself.
Of the staff that left earlier this year, Liz Brown and Rob Clayton Smith have joined Financial Network, and Sue Keaty, Simon Searle, and Paul Thorn have joined other firms.
The five took between 30% and 40% of the overall client base (about 100 clients).
The staff left following what Hayden described as a 'breakdown in relations' following the imposition of a fees structure two years ago.
He said: "The staff were required to log their time, just ten hours a week, against client files, but they were registered as self employed and so didn't want to do this.
"As self employed people they didn't want to uniformly deliver services as is required by RDR. I expect this will be a problem across the industry."
Hayden added: "We had three service levels for fees as well as a pay as you go band but the staff struggled to bring in the money they needed, they also struggled to find new clients. Ultimately this led to a very fractious situation.
"Presumably the firms the staff have joined don't mandate fees yet. They'll be okay until December, but what then?."
All the departing staff have been in the industry for approximately 20 years and have been working for Financial Management Services for between six and 12 years.
The fees situation better suits the remaining staff, according to Hayden, as their clients are higher net worth and are therefore more prepared to pay fees.
The company is currently looking to take on two financial planners DipRFP level 4 qualified that are willing to work under the company's fee structure.
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