Best intentions will still create ‘black hole’ post-RDR

The director of international advisory firm deVere Group warned that although the RDR has driven up standards in the industry, it is still leaving millions of Britain’s middle income investors in an “advice black hole”.

His comments came as the FSA published a six-page document, Financial Advice Changes 1-2-3, aimed at helping consumers understand the changes ushered in on 1 January this year.

The consumer guidance outlines the need for professionalism, what qualifies as independent, how commission works and how the RDR will change how they pay for advice.

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In the document, the FSA said: “Financial advisers have to sign an agreement to treat you fairly.

“We will monitor firms to make sure they meet these new standards. Next time you see your adviser you should ask how much you have been paying for their advice and how much that same advice now costs.”

However, Mr Coady said: “RDR has made the cost of advice more transparent and ensures that all advisers are appropriately qualified – measures that will undoubtedly benefit the client and drive industry standards higher – it has also left the ‘supply’ of independent financial advice significantly, and alarmingly, reduced.

“As a result, it is highly likely that, in the short term at least, only the more affluent investors will be able to access the services of an experienced IFA.”

Carl Lamb, managing director of Norwich-based Almary Green, said: “The whole RDR initiative is just getting more complicated, when it was supposed to make financial products more transparent and of benefit to our clients.”