Is transparency encouraging investments?
A boost in customers searching for financial advisers could be due to clarity in the rules brought at the end of last year
Everyone likes to know what they’re spending before they part with their hard-earned cash, especially if it’s investments, which can leave anyone with sweaty palms. And it looks as if the changes to rules about commission-based selling could have boosted confidence with the industry.
As reported over the weekend in The Sunday Times, latest unbiased.co.uk statistics have shown a 9 per cent increase in searches for financial advisers from January to April this year, compared with the same period in 2012.
This may be linked to reforms that came into force at the end of last year. The Financial Services Authority (which was recently renamed the Financial Conduct Authority) retail distribution review (RDR) meant that financial advisers started charging fees to their customers rather than receiving commission from companies supplying financial products.
The idea is to make sure customers know exactly what they’re paying out for and make the whole process more transparent. These figures seem to suggest that consumers are starting to embrace this change.
The benefits of RDR:
- Advisers must be clear on all their associated costs and will consider all options relevant to the consumer, rather than just supplying investment products that they will get paid commission on
- All financial advisers must be fully trained (to higher standards), in addition to subscribing to a code of ethics to ensure the consumer gets fair and honest treatment
- Investment platforms reveal any commission the advisers get paid from fund managers
For now it looks as if upfront fees are helping customers to feel more secure in making a commitment to investing and, above all, avoiding nasty surprises when it comes to fees.
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