New research says the Retail Distribution Review has had an impact on fees, but hasn't yet set the world alight in raising perceptions of service quality.

One of the most sweeping regulatory changes to the UK wealth management industry in decades appears so far to have little impact on clients’ perception of whether they get high-quality service, although there are noticeable changes with how fees are set, according to Ledbury Research in a study exclusively reported by this publication.

When the Retail Distribution Review, a programme of reforms pushing up advisors’ qualifications and banning trail commissions on fund fees, came into force, it was one of the biggest events in years. The RDR became law in January. The run-up to the introduction of the regime has seen a number of banks and wealth managers change business models and increase asset minimums for new clients, for example.

Ledbury, which polled 500 managed clients with at least £500,000 in investable assets has found a very similar picture in terms of the perceived quality of advice compared with how it was in 2012.

The survey found that 48 per cent of those “strongly agree” that they get good quality advice; 4 per cent “strongly disagree”; 30 per cent “slightly agree”; 12 per cent “neither agree or disagree”, and 5 per cent “slightly disagree”.

“As an industry, there is certainly lots of room for improvement in this vital area, with one in three clients only marginally impressed when it comes to the quality of advice, and one in ten being unimpressed,” Stuart Rutherford, director of Ledbury Research, said.

“There is real upside from getting this right. With clients who are happier with the quality of advice typically placing a large share of wallet with their provider. Some 69 per cent of those who felt they received good advice had more than half of their wealth managed by the provider in question,” Rutherford said.

Fees

In a smaller sample of 200 individuals – each with at least £1 million of assets – Ledbury found that on average, clients have seen a 7 per cent rise in fee levels but rises are not uniform. They have been shouldered by a relatively small number of people, with most HNW individuals (51 per cent) seeing no change.

Comparing the fee experience before and after the start of RDR, respondents reported a growing move away from a common fee structure based on a percentage of invested funds, a corresponding move towards more open charging methods.

“Interestingly, the most popular fee option identified by HNW individuals in this research was a fee based on performance generated, a challenging option which has yet to be taken up widely within the mainstream industry,” the report said.