No Signatory mandate on fileCountdown to the Retail Distribution ReviewSignificant changes are due to take place in 2013, ...
Status & Type of Financial AdviceJust when you thought that you understood that you could take advice from an “Independent...
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Chartwell & The Retail Distribution Review In Jan 2013 (Updated July 2012)

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What is the Retail Distribution Review?
Arriving in January 2013, the Retail Distribution Review (RDR) seeks to address the lack of consumer confidence and trust in the retail investment market by introducing a more robust set of rules for the financial services industry when dealing with the public.
RDR aims to ensure that consumers:
 receive advice from highly respected professionals
 are offered a transparent and fair charging system for the advice they receive
 are clear about the type of service they receive

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Chartwell & The Retail Distribution Review In Jan 2013 (Updated July 2012)

  1. 1. No Signatory mandate on fileCountdown to the Retail Distribution ReviewSignificant changes are due to take place in 2013, which are designed to improve standards within the “retail” arm ofthe financial services industry, specifically in relation to the way financial advisers work with their clients.Although we believe that Chartwell is already working under the proposed adviser regime, we feel that you may wishto understand about the changes and how they may affect you.What is the Retail Distribution Review?Arriving in January 2013, the Retail Distribution Review (RDR) seeks to address the lack of consumer confidence andtrust in the retail investment market by introducing a more robust set of rules for the financial services industry whendealing with the public.RDR aims to ensure that consumers:  receive advice from highly respected professionals  are offered a transparent and fair charging system for the advice they receive  are clear about the type of service they receiveA number of key regulatory changes will be introduced in 2013 which affect the relationship between the adviser andconsumer as well as the distribution of investment products and pensions:Standards of Professionalism: this introduces a much higher minimum level of adviser qualification and evidenceof ongoing continuous professional developmentStatus of Advice: establishes a clear distinction between “independent” and “restricted” (including single/multi-tied)adviceAdviser Charging: product providers will no longer be able to pay initial or trail commission on new products andadvisers can only charge ongoing fees for an ongoing serviceInvestment Platforms: must deliver transparent charges and greater efficiency of serviceHow will it affect me?Although RDR will have some impact on the way Chartwell advises you in the future, we feel that many of thelegislation changes being introduced from January 2013 are already being offered by your financial adviser. In fact,we are confident that we have exceeded these standards for several years, as we strive to deliver consistent highlevels of advice and client service.Higher Professional StandardsThe minimum qualification requirement for advisers will be QCF level 4. Advisers will need to hold a Statement ofProfessional Standing (SPS) issued by a body accredited by the FSA and demonstrate that they continue to “top up”their advice based knowledge every year with a minimum of 35 hours CPD (Continuous Professional Development).All of the financial advisers at Chartwell hold the Level 4 qualification (often referred to as the Diploma) and, in mostcases, further specialist qualifications, training and relevant experience to ensure that robust client advice andongoing support is considered “standard service”.Chartwell Wealth Direct , Chartwell Wealth Management and Chartwell Corporate Solutions are trading styles of Chartwell Financial Services Limited which isauthorised and regulated by the Financial Services Authority. Registered in England 02578206.
  2. 2. Status & Type of Financial AdviceJust when you thought that you understood that you could take advice from an “Independent” adviser (IFA) whoworked for you, or a “Tied” adviser whose advice represented a single service provider (like a bank or insurance co),the range of advice types change completely in January. This will clearly make the decision of the type of adviser youwork with more complex.New Advice CategoriesThe FSA now proposes a new advice landscape:Independent advice is defined as “a personal recommendation to a retail client in relation to a retail investmentproduct where the personal recommendation provided” is  based on a comprehensive and fair analysis of the relevant market and  unbiased and unrestrictedRestricted advice includes all forms of advice which don’t meet the independence test. Restricted advice mustmeet the same suitability, adviser charging and professional standards as independent advice. The key difference isthe requirement to disclose the nature of the restriction.Simplified advice a form of restricted advice, is not defined but describes a streamlined advice process, typicallyautomated, which aims to address the straightforward needs of customers.Basic advice covers a narrow product range of stakeholder-style investment and savings. The qualificationrequirements are lower, as are remuneration restrictions.Chartwell will continue to offer Independent advice as we believe that many of our clients require a wide breadthof advice and access to all aspects of financial products and services both currently available and those that willevolve in the future.Under RDR, the definition of ‘whole of market’ has expanded and will now cover areas such as ETFs, private equityand other more esoteric asset classes. An independent adviser must demonstrate they have considered all of theseproducts in the process of addressing your financial requirements.How will I pay for advice in the future?One of the most significant changes initiated by the RDR is that product providers will no longer be able to pay initialor trail commission on new products. This will be replaced by Adviser Charging.Under this arrangement, all financial advisers will now have to outline and agree fees for their advice in advance. Youwill become responsible for meeting these fees and product providers will no longer be able to pay a commission. Formany clients this will be the first time they have had to pay a fee directly for advice. Firms will be required to provideclear, concise disclosure documents that help customers to understand the services being provided and to recognisethe cost and value of advice.Chartwell are a fee based financial adviser. For an existing client of the firm you are likely to find that you will see nosignificant change in the way you work with your financial adviser. For the last 5 years we have offered our clients 2methods of paying for our service – a direct fee payable by the individual, or deduction of the cost of advice from theinvestment or pension product.This basis of remuneration meets the Adviser Charging requirements so no changes are required, but at your nextreview, we will discuss and agree what we will charge you going forward, the payment options that are available,and what services we will provide.

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