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RDR – Will you pay for Financial Advice?

On the 31st December 2012 changes made to advice standards under the Retail Distribution Review (RDR) will mean that Independent Financial Advisors (IFA’s) are no longer able to claim commission on leads they generate for companies while offering financial advice to consumers.

What this means for consumers is that free financial advice will no longer be available through IFA’s in most situations. There will instead be a cost for the advice they give, which is likely to be charged hourly, and could feasibly be as much as £250 per hour.

Research from Deloitte has confirmed that 84% of people have no knowledge of the impending law changes, and what the implications of them are likely to be. The study from Deloitte included 2000 people and also confirmed that 54% of consumers would refuse financial advice if they are charged a fee.

Lead RDR partner at Deloitte, Andrew Power commented: “Deloitte’s research indicates that many consumers, particularly in the mass market, are unwilling to pay such fees”.

The changes are going to pose new challenges to banks, building societies and other financial services, which will likely have to work on finding new methods of distribution of their products as well as advisers, in order to convince consumers that paying for financial advice is worthwhile.

Nothing will be changing here at, however, where we will still offer free, no obligation advice from our FSA approved advisors.

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