A quirk of regulation is that more often than not wide-ranging, impactful pieces of regulation are reduced to little more than an acronym.
Years after the fact the reasons things are done are simply the result of one or two letters or, in the case of RDR, three.
Lost in the weeds of acronyms and acceptance that this is just the way that things are done now is, I think, an understanding, or at least reflection, of what had to change and the net effect that has had.
Views on the success or otherwise of the Retail Distribution Review are mixed. For some, the introduction of RDR has only resulted in a widening of the advice gap, disincentivising individuals to seek out advice given the front loading of costs, which many mainstream clients consider to be unaffordable or unnecessary.
For others, the increased levels of professionalisation – added to the net effect of driving poor actors out of the market – have only strengthened their own businesses. Of course, it can also be the case that both are true.
When addressing the primary criticism, it is of course true that fewer people are able to access financial advice with many put off by the cost of doing so.
We have unquestionably seen a widening of the advice gap and this, allied to the government’s freedom and choice reforms of 2015, represents a significant challenge to the next generation of retirees who typically will not have the level of wealth and assets that advised clients have today.
It would, in my view, be reductive to lay the widening of the advice gap solely onto RDR. It is inarguable that the cost of receiving advice represents a barrier to some – an issue identified by the Financial Conduct Authority in its recent simplified advice paper.
But it is also the case that wages have remained stagnant for the best part of a decade and avenues to build capital for younger generations have been limited by domestic and international events.
From a professionalism perspective, it is tempting to characterise the advice market pre-RDR as a wild west of unprofessionalism.
The reality is that even before the RDR reforms were introduced, many advisers were undertaking serious self-improvement and seeking to gain qualifications through external professional bodies.
However, it is clear that the industry has taken significant steps forward in this regard. Available data on both net customer satisfaction as well as the number of complaints points to a clear improvement in professional standards.
There is an analysis of the RDR that is seldom discussed. While the RDR was ultimately about increased professionalisation and a raising of standards, it is also a story of empowerment.