The Retail Distribution Review, how will it affect you?


The Retail Distribution Review, how will it affect you?You may be aware that the FSA’s (Financial Services Authority) Retail Distribution Review, or RDR for short, will be introduced with effect from 1st January 2013.

There has been an increasing number of stories in the press about the RDR, some more accurate than others and some frankly just scaremongering. So we thought I’d take the opportunity to explain a little more about the RDR and how it will affect you.

What is the Retail Distribution Review?

Although it will change the face of financial advice in the UK, we welcome the RDR. We believe it will improve professionalism within our industry, whilst reducing the possibility of commission creating biased advice from some advisors.

The main changes include:

Independent v Restricted

After 31st January 2012 the FSA will class firms as either ‘restricted’ or ‘independent’. To remain ‘independent’, advisers will have to consider all types of products which may be suitable for you; they will also be able to consider products from across the entire market.

Some firms will move to a ‘restricted’ model, this means they will not be able to consider all product types, all product providers, or indeed both.

Investment Sense are firmly committed to remaining as Independent Financial Advisers; we believe this will allow us to better service our clients’ needs rather than restricting the areas of products on which we can advise.

Improved professional standards

Giving financial advice is not getting any simpler, legislation is constantly changing, new products are regularly being brought out and consumers are facing a different set of challenges since the financial crisis.

The FSA is therefore increasing the level of qualifications that advisers must have to be able to continue to give financial advice.

You can be assured that all our advisers have the necessary qualifications and experience to continue acting as Independent Financial Advisers after the RDR comes into effect.

Knowing the cost of advice & what you are paying for

This is the change which most of the press stories have focused on, with many stories saying that financial advisers will have to sever some client relationships and will only be able to advise those who have significant sums to invest.

Rightly, in our opinion, the FSA are keen that consumers should know how much they will pay for financial advice, what they will get in return and that the client and the adviser jointly agree how it is paid for.

From 1st January 2013 financial advisers will no longer be able to take commission when they invest money for a client; instead they will have to charge a fee, expressed either as a percentage of the amount invested, a fixed fee or an hourly rate. The fee can be paid directly by the client or can be taken from a product which they invest in.

We fully support this movement away from commission, which we believe led to the possibility of biased advice.

However, we should point that for investment work we have always charged fees and we don’t believe that the changes brought about by the RDR it will mean we charge our clients more for the financial advice we give.

The actual process we go through to give advice to both existing and new clients will not change; we therefore will not have to increase the amount we charge.

We also will not be severing relationships with any clients, or changing the types of people we will give financial advice to in 2013 and beyond.


We have always believed in giving good quality, independent financial advice, we are therefore fully supportive of the Retail Distribution Review.

We believe that it is important for us to retain our independence so our clients can be sure that they are getting the widest possible range of advice.

We also believe that improving the qualifications and knowledge of advisers will help to drive up standards and the quality of advice across the industry as a whole.

Finally, we believe that the move to fees is a positive step. Whilst we clearly cannot speak for other firms, clients of Investment Sense will not see an increase in the cost of the advice we provide.

The changes are amongst the biggest our industry has ever seen, it is therefore only natural you will have questions and queries. If you would like to discuss the RDR in more detail and how it affects you, do not hesitate to contact us on 0115 933 8433, online by completing an enquiry form, or by emailing us at

You find out more about the Retail Distribution Review by reading the FSA guide, which can be found by clicking here .