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RDR – What does it all mean?
The financial services sector is currently preparing for the implementation of the Retail Distribution Review (RDR) – one of the biggest overhauls of financial regulation since the Financial Services Act was introduced in 1986.
You may have heard about the Retail Distribution Review (RDR) but do you know what it is all about? RDR sets out to ensure that, as the client of a financial adviser, you are offered a transparent and fair charging system for the advice you receive; are clear about the service you receive; and obtain advice from highly respected professionals. As things stand, all the changes required for RDR compliance will come into effect on 31 December 2012 and will apply to every adviser across the retail investment market, including independent financial advisers, wealth managers and stockbrokers as well as banks and other providers of financial products
Under new rules following the Retail Distribution Review, all financial advisers in the UK – whether they are described as ‘independent’
In conjunction with other recent legislation, the Retail Distribution Review has specific rules about how clients should be treated and what information they should receive on an ongoing basis. Approved individuals within each advisory business are also legally accountable for ensuring those rules are followed. This provides you with the added reassurance your adviser’s business is being closely monitored within a regulatory framework. In the unlikely event anything does go wrong, there is both a set process and a chain of personal accountability to ensure things are put right.
The Retail Distribution Review is causing advisers to change they way they do business. Many are moving to a financial planning rather than product recommending role. Now, rather than recommending specific funds, say, they are more likely to offer you a comprehensive financial plan and help you keep this on track as your life changes and develops. This will involve recommending a whole range of different products and solutions, depending on what your circumstances demand. Also, as part of the changing charging structure for advisers, you are likely to be able to pick through a menu of different advice options priced at different levels.
As part of the Retail Distribution Review, developments in financial-planning technology have taken the industry by storm. More secure, more flexible and more user-friendly systems mean the way in which your financial plans and products are checked and monitored has improved immensely. Many now have the ability to access information on your products and investments at the touch of a button. For example, instant portfolio valuations let you know if your plans are on track while detailed breakdowns of the assets mean you can realign your investments with your risk profile before any deviation gets out of hand.
Chartered Financial Planner
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Census Financial Planning is an independent financial planning practice providing a professional and comprehensive financial planning service, located on the Lisburn Road in Belfast, Northern Ireland.