In the coming months the Financial Services Authority (FSA) will be spending a great deal of time and money educating consumers on changes to the way people receive financial advice and deal with financial advisers. These changes have come about following the Retail Distribution Review (RDR) which was launched by the regulator in June 2006 as a response to perceived problems within the retail financial services sector and with the aim of increasing the level of professionalism within the industry. Six years later and we are just a few months away from the changes coming into force.

The first of these changes relates to how advisers are paid for their work. Historically this was done through ‘commission’ payments. The company providing the investment product would have paid an adviser a percentage of the sum invested. Often the amount being paid was not obvious to the client, so the change involves moving across to a fee based model where clients know exactly what they are paying upfront and the adviser is not influenced by the how much they would earn from the investment.

The second change relates to the type of advice an adviser provides. From January 2013 every adviser will have to make it very clear as to whether they are ‘independent’ and deal with all types of retail investment products, or are ‘restricted’ where they only consider certain products, product providers or both.

Lastly there has been an increase to the standard of qualification that financial advisers have to meet. Currently advisers only need a level 3 qualification (equivalent to A level standard). From the start of  2013 they will need to be qualified to Level 4 or above (equivalent to Certificate of Higher Education or completing the first year of a university degree). Advisers will also need to obtain an annual Statement of Professional Standing (SPS). This confirms they are suitably qualified , they subscribe to a code of ethics and that they have kept their  knowledge up to date.

So how does Proposito Financial Planning stack up against these changes?

We started offering fees as a way of paying for our services in 2002. Then in May 2005 we became 100% fee based and have been fee only ever since. It became apparent to us long before the RDR  that a commission model would never enable us to provide a regular and optimal service to all our clients. We now see every client every year and are proud to be able to deliver this level of service.

We already make sure that our clients are very clear on the type of advice that we give, which falls into the ‘independent’ category. And through annual reviews we are able to ensure that the investment products they use are always the right ones for them and their circumstances.

Finally both of our advisers – Richard Witcombe and Huw Jones, as well as paraplanner Sarah Kearsey are Level 4 qualified. They all hold the Diploma in Financial Planning awarded by the CII, and both advisers hold the required Statement of Professional Standing

We are delighted to say therefore – that we are well and truly ready, and will be able to continue to offer our clients the same high level of service with no interuption.