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The RDR could drive up to 3,000 advisers out of the industry over the next five years, according to the latest estimates.
London-based CoreData Research UK based its findings on interviews with almost 1,800 practicing advisers, using that sample as indicative of the wider market.
According to the study, 15% of advisers expect to leave the industry between 2013 and 2015, equating to a total of about 3,000. A further 17% were uncertain about their plans.
A drop of 15% is in line with FSA estimates, but the regulator stresses a large chunk of this will be advisers who were planning to leave the industry anyway.
CoreData principal Craig Phillips says a growing consensus consumers will be unwilling or unable to pay for advice under the RDR's adviser charging rules is driving the exodus.
Phillips says the resulting landscape will leave investors in a financial "no man's land" beyond the radars of most advisers and financial planners.
"The FSA should consider diluting the RDR," he says. "Many UK investors will simply disengage from the industry in a fee-only environment, completely undermining the spirit of reform."
The void, CoreData predicts, will be filled by comparison websites and banks.
Meanwhile, Phillips cautions the RDR's goal of eliminating product and provider bias runs the risk of scoring an own goal.
"It's one thing to remove the potential for bias advice," he says, "but another altogether to close the door on people who have a willingness to engage and advise."
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| Comment | New estimates put RDR adviser exodus at 3,000 |
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We are talking over the next 5 years. So that implies 600 per year. How many of these are over the age of 60? I too may retire in 5 years time, but it has nothing to do with the RDR and everything to do with my age. (I'll be 70 in 2015). Then it says nothing about how many new entrants there may be. It also says advisers - it doesn't say INDEPENDENT advisers. If the Banks loose 3,000 who is going to cry? Then of course we have the luddites and the - shall we be polite and say – dimbos. Don’t be aghast, be honest – we’ve all come across them. If we loose some of those it would be an improvement. So all in all this is a bit of a non story.
Posted by: Harry Katz
Potential adviser exodus
I feel a larger issue is the new examination rules. I have meet numerous advisers who are not going to take them, are resentful about the rule and are being forced to retire as a result. Personally I hope I will qualify to the new standards, but the exams are very challenging.
Posted by: Ben Walters
Good!
As an aspiring IFA, this news is good for me! I say that tongue in cheek, but to an extent it is true. I have my FPC and MAQ and have been practising as a mortgage / protection advisor for 8 years. I'm currently undertaking the Diploma in Financial Advice course through the ifs, which will make me "RDR proof", upon completion of which I hope to begin practising in investment and pension advise too. I see the fact that many existing advisers are planning to leave as an opportunity for me, and I doubt that I'm the only one looking at it from that perspective.
Posted by: Ross Leckridge
Exodus
I have a number of colleagues who are IFAs and under retirement age - RDR is making it interesting because when it comes to exams not all of us will be able to pass them - even though the advice we give is spot on. I think I will be able to pass (just one exam to go) but I'm not thinking it will be an opportunity for me but a great loss for Joe Public. There are some selfish people about trying to reduce the competition at the expense of the clients.
Posted by: Steve S
adviser exodus
firstly did the FSA really think 15% would leave and are happy with this. As the FSA seem to have a increwaseing budget/costs every year does that not mean that the remaining advisers will have at least a 15% increase in fees ( you can bet on it) I am planning on leaving not because of exams but because the enviorment the regulators are putting out is they want us to advise clients on products that have no risk high profits and tax efficent they are in dream land
Posted by: r Lundon
Problem with exams
The current exam set up is not much use because the knowledge attained to pass soon goes out of date What use is G60 now for example? Rather than useless qualifications therefore, wouldn't it be better to have online multiple choice tests every year in all areas where IFAs want to retain authorisation?
Posted by: Ken Durkin
EXODUS
A drop of 15% is in line with FSA estimates, but the regulator stresses a large chunk of this will be advisers who were planning to leave the industry anyway. How do the FSA know who was leavung anyway? Did advisers call then up and say " we are leaving anyway" What about those advisers who are almost at retirement age? It is not cost effective for them to take time out to sit exams in order to practice for a further 18 months or so. The regulator obviously does not care. As long as they can keep face nothing else matters
Posted by: lol
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Old blood going ! Where is the new blood ?
Sadly these days all we hear or read is negative news about RDR , perhaps those in charge of reporting declining numbers might wish to drill down a little and find out how many new people are coming into the industry then we can all take an informed position about the future of our precious industry !!Perhaps then debate should be arranged as how to lessen the impact for the consumers who have been in the most well advised by the vast majority of the people leaving as they dont wish to be engaging with further education or at least the proving of their capabilities !!!
Posted by: Simon Rice