The latest FSA guide to the RDR aimed at consumers "Financial Advice Changes 1-2-3" is a step in the right direction as it attempts to educate the customer on some of the key aspects of the RDR
AXA Wealth's Andy Zanelli asks: "Does it go far enough?"
The RDR is one of the most fundamental changes to the way that financial advice is given in the UK in the last 20 years and has some far reaching consequences for both the consumer and the financial adviser. The point in all three areas covered in the guide should be to educate and then to provide some key questions that a client may want to ask his/her adviser.
As well as drawing attention to the historical role of commission, for some but not all previous advice, and the change to explicit costs, the paper will encourage questions such as: "What exactly am I paying for and how is the cost broken down into its component parts?" Crucially, the consumer will be asking themselves: "Am I getting value from the cost of the advice?" Improved professional standards and qualifications could form questions such as: "Could you explain to me the level of professional qualifications you hold?" and "Do you have a particular area of specialism?" The consumer can then satisfy themselves they are comfortable to deal with a particular adviser.
The basic facts of the paper are informative but consumers need to be encouraged to actively question the adviser in order to determine not only cost but also real value.
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