The Financial Services Authority (FSA) is working with firms, advisers, consumer groups and industry experts to implement a process known as the Retail Distribution Review (RDR). The FSA is modernising the way recommendations about investment products such as ISAs and pensions are made to investors.
These changes will ensure:
- Advisers tell you how much their services cost and agree with you how much you will pay – upfront. This means advisers cannot hide behind hefty commission payments.
- Advisers who offer you independent advice must consider all relevant options for you and do so free from any restrictions (such as working with only a select group of product providers) or bias (such as being paid by commission). This makes sure that the advice offered to you is truly independent and, if it is not, the adviser must clearly explain to you why not.
- The minimum level of qualifications required to be an IFA is rising significantly. This means many IFAs will be leaving the industry if they don’t achieve the target.
This is all good news, right? We couldn’t agree more. In a nutshell:
- Clients will receive advice free of bias (in particular from commission).
- They will know – and agree to – how much the advice is costing them.
- They will be advised by professionals with a higher level of technical expertise and qualifications.
So what does this mean for you working with us at MFP Wealth Management?
Not a lot really. We already provide advice free of any bias, as we operate on a fee only basis. We let you know and agree with you up front how much the advice will cost. And I’m a Chartered and Certified Financial Planner, so I already hold the highest qualifications in the profession – significantly higher than those required for all advisers from the end of 2012.
What’s more we’re constantly striving to be better. We’re currently implementing the ISO standard (British Standard) for financial planning firms and hope to be one of the first firms to be assessed later in the year.