Life insurers might take some short-term pain when the Retail Distribution Review (RDR) is implemented, generating less business from independent financial advisers as consumers adapt to the new environment, says S&P Global Ratings. "There was a significant reduction in adviser numbers after the UK implemented RDR. The volume of business emanating from IFAs [independent financial advisers] fell in the short term because consumers were not used to paying directly for financial advice," said Ali Karakuyu, director of insurance ratings at S&P. Largely adopted from the UK by the Financial Services Board, RDR proposes major reforms to the way retail financial products are distributed. Customers must explicitly agree to any adviser fees they pay, and continuing fees or commission may be paid only if continuing advice is rendered. Figures from the UK’s Financial Conduct Authority show that adviser numbers fell by about 10,000 between 2011 and 2014 — a year after RDR came into effect. Most ...
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