You may have gathered that the FSA are implementing something called RDR (Retail Distribution Review). The long and short of it is that to be called “independent” advisers must have a clear fee charging structure. In addition firms have been told to have higher reserves on deposit and have more exams. This all gets implemented from 1st January 2013.

Long story short, there are around 20,000 financial advisers in the UK and this is expected to reduce by 15% according to the FSA. A new survey places estimates at similar levels but with a further 17% unsure if they will continue to operate. The main sticking point is the general problem for clients to pay direct fees. Something that our clients have always done, but most firms have “fudged” this issue using commission to offset a fee.

Working through the maths, with a population of 60m the average adviser: client ratio is 1:3,529 as a conservative estimate. The obvious and unavoidable conclusion is that most people will be left to the mercy of online comparison sites or the Banks, who make up the lionshare of complaints.

Applying some fairly simple economics to the price of financial advice – supply v demand. There will be a much reduced supply, so in general expect prices to rise for most IFAs.

We have now had 11 years of experience advising in this way and will not find the new regime problematic. Our model has proven to be successful and sustainable.