Despite fears ahead of the introduction of the Retail Distribution Review, more than four in ten (43 per cent) IFAs believe that it has improved the quality of advice they provide to clients, while just 5 per cent say it has had a negative effect, according to a new survey by Investec Wealth and Investment.

Despite fears ahead of the introduction of the Retail Distribution Review, more than four in ten (43 per cent) IFAs believe that it has improved the quality of advice they provide to clients, while just 5 per cent say it has had a negative effect, according to a new survey by UK-listed Investec Wealth and Investment.

The survey, which polled 150 advisors, found that nearly one year after the introduction of the RDR a majority (59 per cent) of advisors believed that it had improved or significantly improved their levels of knowledge about the investment sector.

However, when asked to rank the biggest challenges the RDR has had on their businesses, advisors cited the costs they have incurred and maintaining levels of profitability. 

In third place was the cost of professional indemnity insurance, followed by the transition from a commission to a fee-based approach. 

Despite the concerns expressed by many in the run up about passing the newly required QCF Level 4 qualification necessary to be an advisor, this was ranked the fifth biggest challenge.

The research also underlines the role the RDR has played in the continued growth in popularity of partnering discretionary fund managers.

One in four (23 per cent) advisors have already increased or plan to increase the number of client portfolios outsourced to DFMs, compared to just 3  per cent who plan to reduce the number. 

Furthermore, over half (53 per cent) of respondents believe that increasing numbers of advisors are now outsourcing to DFMs and over a third (37 per cent) think that bespoke portfolio options are most commonly selected compared to 24 per cent who favour other models.

“This research strongly indicates that advisors are positive about the impact the RDR has had on the industry. Many are now better qualified, more knowledgeable and their clients have benefited as a result," said Mark Stevens, head of intermediary services at Investec Wealth and Investment.

“One year on, the overriding challenge posed by the RDR has been the financial costs involved with transforming their business models and the impact this had had on their profitability. This has translated into consolidating and in some cases reducing client bases in favour of driving profitability. We expect that over 2014 the focus will shift back to growing their businesses,” said Stevens.