RDR one year on - How the regulations are affecting financial advisers
10 December 2013
As the Retail Distribution Review approaches its first anniversary, Andrew Power, lead RDR partner at Deloitte, outlines how the rules are affecting investment and financial advice markets.
Platform market will consolidate
Increased competition and falling charges will lead to consolidation in the investment platform market. Assets held on platforms will grow from £200bn today to £600bn by 2018. However, margins will be squeezed and the breakeven point will rise from £20bn assets under management to about £40bn. The result will be that the intermediary platform market will consolidate to fewer than 10 large providers.
Financial advisers will restructure business models
The economics of delivering financial advice means that advisers will need to focus on clients outside the mass market if they to have a sustainable business, or develop guided-advice models.
Direct to consumers advice will become more important
The non-advised market represents about 20% of the wealth market and will grow as consumers who increasingly use the internet to manage their finances and legacy portfolios are migrated to clean share classes. Fund managers, advisers and insurers have two to three years to successfully establish direct to consumer business models.
Passive funds and risk rated portfolios will grow in popularity
Low-cost passive funds and risk-rated portfolios are likely to continue gaining market share as advisers optimise charges to clients and focus on financial planning rather than picking investments.
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.