The Retail Distribution Review (RDR)
Why 2013 will change the way you invest for ever
A huge wave of change is shaking up Britain's financial industry right now – one that will change the way that you invest for the better. From January 1st, 2013, independent financial advisers will no longer be allowed to take commission from financial product providers for selling their products. Instead, they will have to agree a fee with you upfront.
This is a huge change, and one that we've been campaigning for here at MoneyWeek for years. But why does it matter?
Firstly, as an investor, you'll be able to see where your money goes more clearly. If you were under the illusion that financial advice was free, you won't be for long. Rather than have commission charges quietly deducted from your investments each year, you'll get to see exactly what you've been paying, and what you've been getting in return for it.
Secondly, it gets rid of the potential for 'commission bias' - the danger that an adviser would rather recommend a product offering a large commission, rather than one that suits their client best. Thirdly, it means that fund managers and product providers will have to stop relying on advisors to act as a freelance sales force, and instead have to pay more attention to the needs of individual investors.
Finally, if you haven't done so already, it means that you have the perfect incentive to take control of your own money, and start learning to invest for yourself. For a quick and painless way to get started, sign up for our free MoneyWeek Basics series of emails – they'll start you off with the key investment lessons you need to learn.
In the video below, MoneyWeek's deputy editor, Tim Bennett, explains just how the changes – part of what is known as the Retail Distribution Review (RDR) - work.
We'll be writing regularly about the RDR and what to watch out for over the weeks and months ahead. You can keep up to date by keeping this page bookmarked. And you can find out more about the sorts of assets you'll be hearing more about, the impact of the RDR on your money, and key questions to ask your adviser in the list of articles below.
A new ruling from HMRC classifies the rebates of fund commissions from investment platforms as income - and that makes them taxable. But that could all soon change.
Keeping costs down is one of the most important things to consider when investing. If you’re not careful, you can blow a big hole in your savings pot. Phil Oakley explains why you may be paying much more than you think.
The changes brought by the Retail Distribution Review have finally come into effect. Merryn Somerset Webb explains what that means for your money.