Introduction of The Retail Distribution Review from 1 January 2013

The Retail Distribution Review (RDR) was introduced on 1 January 2013 meaning that Independent Financial Advisors (IFA’s) will no longer be paid commission by the providers of financial products. The RDR also requires financial advisors to be appropriately qualified in order to provide financial advice.

The RDR has been introduced in order to provide more clarity over the fees paid to IFA’s. Investors will have to pay the IFA’s directly for the financial advice they receive. Previously IFA’s received trail commission for every year the investor holds a fund purchased through them. In some cases investors may not be fully aware of the true extent of the fees they are paying for the advice received.

The RDR is likely to have an impact on wealth management firms and the type of advice they provide to investors. Investors on the other hand may receive less advice if they are not prepared to pay the required fees.