A year after the implementation of the Retail Distribution Review, two thirds of advisors are optimistic about the coming year, with only 10 per cent expecting the regulation to have a negative impact on their business.

A year after the implementation of the [tag|RDR|]Retail Distribution Review[/tag], two thirds of advisors are optimistic about their prospects over the next 12 months, with only 10 per cent expecting the regulation to have a negative impact on their business.

This is in stark contrast to pre-RDR sentiment, which showed more than 40 per cent of advisors believed that the review would impact them negatively, a joint survey from Fidelity Worldwide Investment said.

The independent research, which canvassed the opinions of more than 200 IFA’s, also revealed that a year on, 37 per cent of advisors report that they are trading more profitably than the same time last year, compared to 23 per cent who have actually seen a drop in profits.

Moreover, 35 per cent of advisors said that moving to a fee based structure did not have an impact on their clients, although a quarter of advisors said that their clients were happier with the original commission arrangement, but still agreed to move across. Less than 10 per cent said that they had lost clients in the process of transitioning into a fee-based world which equated to less than 15 per cent of their client base.

“Our experience is that most advisor businesses, post January 2013, are in better shape than many had predicted, so it’s great to see this being backed up by the survey results. Undoubtedly, those that made the ‘move to fees’ earlier than the January deadline are seeing the benefits in doing so and continue to set the pace for others,” said Jon Everill, head of advisory services at Fidelity’s FundsNetwork.

In addition, the study also revealed that financial advisors are starting to return to the industry, with 10 per cent believing that industry employee numbers will rise in 2014 despite a vast majority (91 per cent) seeing a decline in advisor number post-RDR and up until now.

Advisors: Clients not yet benefiting from RDR

Conversely, the survey also showed that advisors believe the benefits of the review are yet to materialise in the minds of consumers. One of the main aims of the RDR was to promote “a resilient, effective and attractive retail investment market…giving more consumers confidence and trust in the market,” the [tag|Financial Services Authority|]Financial Services Authority[/tag] said when implementing the RDR.

However, the survey revealed that just 37 per cent of advisors believe that consumers will have access to better quality advice, while 60 per cent said that their clients still do not understand the RDR or why changes have been made, and more than three quarters of advisors feel there has been no change in terms of their clients’ confidence towards the financial services industry.

“Going forward, the picture looks much better for advisors and their businesses, with an indication that things will pick up over the course of 2014. Whilst this is encouraging, the industry cannot ignore that more needs to be done to educate the end investor and to help them understand why the way they currently invest is changing,” commented John Clougherty, head of UK retail at Fidelity Worldwide Investment.