15th August 2013
Following the biggest overhaul in decades of the UK’s financial advice industry, the country has seen a rise in the amount of advisers offering their services to investors writes Philip Scott.
According to research from the City watchdog, the Financial Conduct Authority (FCA) there are now 32,690 retail investment advisers working in the UK, a rise of 1,558, or 6 per cent since the numbers were last collated in December 2012.
New Year’s Eve 2012 ushered in new regulations covering financial advice in the UK under the title of the Retail Distribution Review (RDR). The new legislation banned financial advisers from being paid commission by investment fund providers for recommending their products. the regulator contended that less scrupulous advisers were often tempted to sell funds from firms which paid them the most commission and that this cast a pall over all advisers.
Now investors have to pay upfront for advice, either via a percentage fee or an hourly rate, which averages circa £150. In addition, the new rules required retail investment advisers to attain a higher standard of qualification than the previous standard.
Following the introduction of the new rules, 97 per cent of advisers have the appropriate level of qualification, with the final three per cent recent entrants who are still studying within timescales permitted by the rules. This stands in contrast to 2010 when less than half of all advisers were qualified to today’s acceptable level.
Commenting on the higher numbers, Clive Adamson, director of supervision at the FCA, says: “Today’s figures show that those looking for financial advice still have plenty of options open to them. What’s more, by establishing standards across the industry we are helping to build confidence by reassuring consumers and raising the profile of the adviser profession.”
Notably a survey from consultancy group Deloitte, published in late 2012, concluded that RDR could leave up to 5.5m financially orphaned, as paying by the hour would not appeal and many financial advisers and high street banks de-prioritised a large portion of customers, and moved upmarket to more cash-rich clients to defend profit margins.
For those looking for financial advice, ensure you find an adviser who is truly independent, you can find one in your locality here and make sure you understand the costs and find out how qualified your adviser is.
Should you seek out financial advice?
Although there are a plethora of free websites offering investment advice, on some occasions, it may be worth seeking the help of a professional. And it’s worth remembering that many good advisers will give free or discounted first consultations. Such a meeting may provide you with a decent idea of how you can reach your financial goals. You may also wish to meet an adviser to discuss…
Thousands of Britons have pensions spread over a number of jobs collected throughout their career, as such it may be worth getting some advice to look at how to consolidate them. And if you are nearing retirement age, a good adviser should be able to help you arrange your finances and pension arrangements for when you leave work.
Despite HMRC’s tagline that ‘tax doesn’t have to be taxing’, unfortunately it usually is, even at the best of times. And and when it comes to inheritance tax (IHT) having a professional oversee your circumstances could save you and yours a lot of cash.
Find out more about financial advice at Unbiased.co.uk the Government’s Money Advice Service website or read Mindful Money’s guide on what you need to know and the questions you need to ask when it comes to getting advice.