Financial advisers and investors are struggling to prepare for the imminent impact of new regulations under the Financial Service Authority's Retail Distribution Review (RDR), a BlackRock commissioned survey of advisers has found.
From January next year, investment advice will become fee-based, replacing commissions advisers previously received from product providers. However, 61 per cent of advisers said they did not feel prepared for RDR, with 87 per cent admitting they had not finalised future client propositions.
Significantly, 57 per cent said they were unsure of the impact their adviser status - being ‘independent' or ‘restricted' - would have on their businesses. However, advisers generally agreed (68 per cent) that it would be more important to become either a chartered or certified financial planner than an IFA over the next five years.
At the same time, advisers felt that clients are not ready for RDR, with just 12 per cent believing clients are aware of the implications the new regulations will have on the availability and nature of investment advice.
Tony Stenning, Head of UK Retail at BlackRock, said, "With under 130 days until RDR takes effect, many advisers and investors are still wrestling with what the new regulations will mean and how they should act. Some advisers are clearly racing to complete the minimum required qualifications, but this is potentially drawing their attention away from transitioning their businesses and communicating potential changes to clients."
BlackRock aims to take a leading role as the UK moves to a fee-based model for financial advice under RDR. Earlier this month, BlackRock unveiled its new online Adviser Centre and the BlackRock Transitioning Tool, a free online service to help advisers determine the costs of servicing clients, establish a client service proposition and model potential revenues.
In July, BlackRock also launched its first RDR-friendly funds range, the BlackRock Consensus Funds, which act like funds of index funds by investing in several other BlackRock index-linked products and are designed to form a core part of an investor's portfolio. These are independently risk-rated to help advisers match clients with suitable investments, and ultimately help investors build simple, cost-effective and diversified portfolios.
The survey of 88 advisers was conducted by The Ideas Lab and NMG on behalf of BlackRock on 2 July 2012 at BlackRock's ‘RDR: Preparing for the final straight' client seminar.
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