Millions of people are receiving little or no guidance regarding their investments, what with radical reforms being brought in to up financial advice and wipe out mis-selling. With the Retail Distribution Review (RDR) coming into effect in Hogmanay, the big names in the banking industry are apathetic towards branch-based advice.
Financial advisers have left the industry or are walking out on clients considered insufficiently affluent. Clydesdale Bank, Lloyds, Royal Bank of Scotland, Santander, HSBC and Barclays no longer provide investment advice over the past year.
The legislation abolished the payment of commission on investment and pension products, meaning that advisers are now remunerated in lieu of investor-agreed fees; many banks are struggling to provide the level of service that investors are willing to pay for.
Better quality advice that is not dependent on commission generated from the sale of a product is good for the consumers, but the exodus of high street banks from the advice market has left thousands of investors in want of an adviser. If you are one of these so-called “orphaned investors”, here are steps you can take to ensure your financial plan remains on track.
You could secure the services of a highly qualified, independent financial adviser or take advice that is not independent – or buy a financial product online with no advice at all. This could entail missed opportunities or mistakes and may cost you more in the long run. By paying for independent, whole-of-market advice you may gain access to the lowest-cost products and funds, which will ultimately save you money and improve your investment returns.
Ask any potential new adviser whether they are independent or restricted and their level of qualification. Many independent, fee-based advisers hold the minimum level of qualifications imposed by the RDR, the diploma in financial planning, and may have advanced qualifications such as chartered or certified status.