Question on RDR/Kickbacks

cashbackproblems

Hi

Im aware alot of IFA's and financial geeks post here and just wondering if anyone can offer any help on the below which i am trying to get my head around, as i am researching to enter the industry.

Firstly i have read into RDR and the impact it will have on kickbacks/retrecessions being abolished and the changes such as smaller ifas going bust, longer term relationships, higher fees for clients, push towards indexes etc...but when providers receive a kickback how is the amount calculated and how does the process work? Do they provide a fixed % and do you deal directly with the fund managers?

Secondaly the big banks like Barclays PWM, they have their own fund but also client advisors, so do the advisors just sell Barc funds or is this not allowed?

Thanks!

crittertog

cashbackproblems wrote: »

when providers receive a kickback how is the amount calculated and how does the process work? Do they provide a fixed % and do you deal directly with the fund managers?

It's likely that what is now commission will be converted into an explicit annual charge, either paid directly by you, or removed by the platform provider (although at least some IFA's are waiting for the FSA to approve their suggested new model!).

cashbackproblems wrote: »

Secondaly the big banks like Barclays PWM, they have their own fund but also client advisors, so do the advisors just sell Barc funds or is this not allowed?

If they opt to not advise on some items, then they can't call themselves "Independent" - it has to be "Tied" or "Restricted" (I think!).

dunstonh

and the changes such as smaller ifas going bust

IFAs working to old model terms will find it hard to survive post RDR. Most IFA firms moved to new model terms many years ago.

Most products have catered for the RDR style of charging for the best part of a decade. e.g. if a product paid 3% commission then the 3% was explicitly charged against the capital or deducted over a limited period. Post RDR, if you agree a 3% charge then 3% will be deducted from the capital (it cannot be taken over a period though).