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57% Of wealth managers fail full market test

One-third of wealth managers expect to be placed under the restricted banner after the RDR, according to research from JP Morgan Asset Management.

The report, The retail distribution review: the challenge and the opportunity for wealth managers, says 35 per cent of wealth managers expect to be restricted while over half of all wealth managers currently fail to meet the independence tag which allows them to offer advice across the full market of products.

It says that 57 per cent of wealth managers do not reach the RDR requirements for full independent advice, with many focusing on investment and not packaged pension or life insurance products. Of those not meeting the requirements, only 15 per cent intend to do so.

JPM says some advisers do not mind the restricted badge as it allows them to focus on the core areas of their business but there will be a push for advisers to call themselves specialist or independent in their area, provided it is whole of market coverage for that area.

The survey reveals that half of the wealth managers polled expect advisers to outsource more of their investment business after the RDR, with 30 per cent saying that outsourcing is set to “increase significantly”.

However, although half of advisers outsource client portfolio management, only 19 per cent of advisers say they will outsource significantly more investment business while a small number of firms say they will reduce the degree to which they outsource investments.

Informed Choice chief executive Nick Bamford says: “Wealth managers’ strengths have always been on the investment side so I expect the RDR will see more of them look to link up with IFAs to form a complete offering.”

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