The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

The people who need advice most will simply not pay a fee for advice. The whole idea is senseless.

Of course it is perfectly possible to take the contrary view. Driving up standards must be in the consumer interest despite the change resistors. Adviser charging where the cost of advice comes from the product (no it is not about charging fees why do people continue to suggest it is have they not read the RDR papers?) must be better than commission determined by product providers if you are truly independent surely you would want to set your own price? And the vacuum created by any exit from the IFA community will be filled by alternative delivery mechanisms. The future may be very different from Peter's view, good quality advice at low cost may actually become easier to obtain. Take the recent ABI conclusion that typical one product advice via an IFA costs £670. RDR represents a great opportunity to develop and deliver a low cost advisory service with consistent and high quality output. You can see why this is a threat to some but forward thinking IFAs will see it as an opportunity

Not a suprising headline - I think most IFA's have been saying this for ages. My concern is how easy is it for an individual to use the platform and other systems that will follow? Inexperienced investors will be investing in high risk investments - how irresponsible is that? Yet again the people loosing out will be the general public.

Adviser Charging has to make sense, as Nick says (I agree with Nick?), enabling the adviser to decide/control what to charge. My worry is that remaining IFA's after 2012 will use RDR as an excuse to increase charges not decrease them! Therefore the FSA's move to ensure advisers justify their charging structure is imperative. Already some advisers are charging 1%pa or higher - no matter what size of portfolio. That is hard to justify. At the end of the day though fewer advisers in the industry will make it difficult for anyone not a HNE to seek affordable advice. The very people that need it!

The argument about affordability of advice, and the future of advice for the mass market and modestly wealthy, continues on this page. Jeremy Newbegin (RDR Good or Bad?)argues that "The FSAs move to ensure advisers justify their charging structure is imperative. Some advisers are charging 1% pa or higher - no matter what size portfolio. That is hard to justify". No it is not. If an adviser services 125 clients a year(3 a working week)it is reasonable to assume that each service takes an average 8 hrs/1 day for the adviser, his Paraplanner and an administrator. The other two days a week are likely to be taken up with marketing for new clients and study. Assuming the adviser earns £70K pa, the Paraplanner £30K pa and the administrator £20Kpa, then the salaries alone are around £135K (inc NI). Add Establishment and Regulatory costs of, say, £50K (which is low. A case could be made for over £100K), then the total costs run to £185K. Say £220K including a profit margin. This means each client being serviced needs to generate over £1750 pa in either Trail/ Retainer or Arrangement fees. At a flat 1% pa (whether only a recurring annual fee or including an element of one off arrangement fee), the average client must have £175K invested. And 1%pa will only pay for one service a year. Therefore larger clients, say £500K invested, who need 2 or 3 service calls a year will still have to pay 1% - unless you believe the larger client should only receive one service a year. Smaller clients with, say, £50K invested will either have to make do with an inferior (as in less personal), arms length service, or pay substantially above 1% pa. So, if a smaller client, investing £20K to £50K wants continuing Independent advice, he will have to pay somewhere in excess of 3% pa! That may be the true cost of Independent advice, but at this stage it becomes impossible to justify as the cost exceeds any possible benefit. Unless the adviser is able to save on product costs (ETFs?), the client is better guided to a broad based, less personal, investment portfolio requiring only occassional advice, which can then be monitored on an arms length basis. Related advice (Tax and Estate Planning etc) will be available to the above average wealthy client, but not available to this client. So, as in all walks of life, only the wealthier will benefit from RDR, and those less wealthy will struggle along with inadequate advice as ever. So Jeremy is right in his conclusion that "fewer advisers in the industry will make it difficult for anyone not a HNE to seek affordable advice"

I find Nick Bamford's comments trite and trivial. Who has his commission determined by providers? Certainly not me. Has he not looked at commission menus, how they have developed over the last few years? Take investing through Skandia as an example. With upper and lower brackets for commission (initial &/or trail), one is quite free to decide a level of remuneration which is both adequate and fair to the IFA and to the client. There is absolutely no problem whatsoever with this sort of approach. And of course, when clients are offered commission or fees to remunerate their adviser what do they choose? Yes, the big C. So not only am I in charge of my own levels of remuneration and not the product provider, but I am also able to get paid and do not have to argue with reluctant clients over fees or else to work pro bono for the more impoverished people who consult me. RDR commission vs fees with factory gate pricing is totally a non-issue, except of course as just another power play by the FSA. And finally, where is this 'good quality, low cost advice' to come from? If it were that easy it would be here now. The only certainty is any void will be filled by the banks. By then, of course, Hector Sants will have finished his time in the public sector and gone back to banking to receive the congratulations of all his cronies for the good work he did in causing the collapse of independent advice channels to the ultimate benefit of his new chums.