The introduction of the Retail Distribution Review (RDR) on 31st December 2012 has led some commentators to conclude that more investors will make their own investment decisions.
As the cost of independent financial advice becomes more transparent, some investors may believe that this represents insufficient value and instead start making their own investment decisions.
Whilst advice has never been free, a move from commission to adviser charging will certainly highlight the real cost.
We expect to see a big increase in the number of execution-only investment platforms, where investors make and execute their own investment decisions without advice, once the RDR is fully implemented.
However, one consequence of this move to self-directed investing could be more people seeking independent financial advice. New research from AXA Wealth has found that 45% of advisers predict this outcome.
What could result is a blend of self-directed investing and advice, with investors engaging with an adviser to keep their Financial Plan on track, as they build and manage their own investment portfolio.
With a growing ability to access detailed information and research online, we have no doubt that some investors will prefer to disengage with their financial advisers and go it alone. Despite losing the various regulatory protections associated with taking advice before investing, this move could result in marginal cost savings.
What all investors (self-directed and advised) will want to ensure in 2013 is that they are getting excellent value for money.
Where paying for advice, this cost should be fully transparent and the value received in return for advice fees should be clearly explained.
Has your adviser explained what they do in return for the commission or adviser charges you currently pay? Speak to us to find out about the ongoing service we provide to our clients. We offer an initial meeting at our expense and with no obligation.
Photo credit: Flickr/Lady Madonna
