The latest survey from RetiringIFA has shown that the IFA sector is taking a severe pummelling under the RDR regime. In fact, over a third of IFA businesses have experienced losses in turnover since the RDR was implemented just 5 months ago.
The survey also showed that nearly 2 thirds of turnover remaining in the independent sector was still made up of income paid from providers rather than client fees despite being 5 months post RDR. Particularly worrying was that less than 20% of IFAs have been able to shift half of their turnover into client paid fees.
The survey also indicated that there was still a lot of consolidation work to be done in the sector with 18.87% of IFA owners stating they were looking at leaving the industry in the next 24 months.
On a more positive note a quarter of IFA owners reported an increase in turnover since the RDR and over 40% of IFA owners are planning to expand their teams in the next year.
The Retail Distribution Review continues to split the independent sector down the middle in terms of opinion with 48% in favour and 52% against the new regime.
The survey was aimed at the independent sector of retail advice and was completed by over 200 IFA business owners.
Actual Survey Results
1) Are your business turnover levels up or down since the RDR came into force?
Up – 25.47% Down – 33.96% Similar – 39.62% Unanswered – 0.94%
2) Are you looking at leaving the industry in the next 24 months?
Yes 18.87% No 80.18% Unsure 0.94%
3) Are you looking at expanding your team in the next 12 months?
Yes 40.57% No 58.49% Unsure 0.94%
4) How much of your business turnover is paid to you directly from clients this year?
Less than 25% 63.21%
Between 25%-50% 16.98%
Between 50%-75% 9.43%
Over 75% 10.38%
5) On the whole do you think RDR is a good thing?
Yes 48.11% No 51.89%
Please share any thoughts below…
Worrying stats… Everyone knew the RDR would ruin the industry.
RDR is the best piece of legislation for our industry. If we can move the qualification level to Level 6 (minimum) then we will be on a par with Accountants & Solicitors.
For us as an IFA Practice – business is booming.
I think the early days will do the proverbial sort the men out from the boys. We are managing alright up to press, some clients are making a noise about fees but if they see we are doing a good job for them then they are happy in the end.
We were well organised pre RDR because we put in a lot of effort. Time will tell, if it doesn’t work I think there is a mechanism in place to change back to the old regime. Lets face it there is nobody to blame now if it doesn’t work, it will be just ANOTHER monumental cockup that everyone is akin to when you mention the three letters FSA!
I was happy that RDR has led to a higher benchmark qualification, but am not happy at the change in method of remuneration. Perhaps it should have been in two parts.
I think the survey has to consider more business owners over the world. The result indirectly affected Selling Annuity rates in the U.S market.
Hope you are charging your clients VAT