Independent or Restricted?
In January 2013 the RDR (Retail Distribution Review) brought sweeping changes across financial services. Fifteen months in, now is as good a time as any to reflect on the main changes RDR delivered.
Financial advisers, indeed all firms offering advice to the public, be they Wealth Managers, Banks, Stockbrokers, Financial Planners or IFA’s, are either Independent or Restricted – there is no middle ground.
Independent means just that – ‘unbiased and unrestricted’ advice based on a ‘comprehensive and fair’ analysis of the market.
Restricted means limitations are placed on the providers an adviser may recommend or the type of products they use, either way you will not be getting a complete picture of the financial world. Many of the biggest financial services firms are now restricted in their advice remit.
Those providing advice must now hold a higher level of qualification of QCA Level 4, often called ‘Diploma’ level. Advisers must have a statement of professional standing (SPS), a proof of the level of their abilities from a recognised body. Many firms have gone over and above this basic level. In our view ‘Corporate Chartered’ is the new bench mark for delivering high quality advice.
Commission has been banned. The costs of any investments, advice, products or service must be agreed between the customer and adviser. This is to be known as ‘Customer agreed remuneration’. Fees may take the form of hourly rates, price per job or percentage of assets but it must be clear who’s paying and what you are paying for.
Here at Plutus we are firm believers in the value of independent advice. The heart of our proposition is to form an on-going interactive relationship with our clients. To do this we need to be completely free of outside influence with no limits placed on the recommendations we make.
If you are unsure of the type of advice you are being offered ask to see the firms terms of business, they are obligated to inform you of the model they operate.
Article by James Robson, Financial Planner at www.plutuswealth.com