Many investors will be searching for a cheaper IFA
With the new changes to the process through which financial advice is being paid for there will be people all across the UK facing up to the reality of the cost of financial advice.
IFAs all over the UK will be having conversations with their clients about the cost of their charges in order to meet the new requirements of the Retail Distribution Review (RDR). These demand that financial advisers agree with their client the charge that will be made for advisory services, initial, one-off and ongoing.
It is expected, though this remains to be seen, that this may lead to many existing clients being priced out of financial advice. In the past there has been a thought that financial advice is free. This comes from the process of financial advice being paid for through commissions, where the client did not have to get involved with the physical payment of the charges.
However the FSA wish for this to be a thing of the past and have now banned commissions. However with the cost of advice being made much more transparent, we as a consumer society are naturally drawn to querying value for money. Knowing the price and value of something allows us to compare much more easily between different providers. This, in essence is what the FSA is hoping for.
So my view is that there will be many more clients searching for a cheaper IFA for investments in particular, because the cost of advice in this area can vary considerably.