The 1st January 2013 sees the dawning of a fresh new age in UK financial services. The slate will be wiped clean with the introduction of the Retail Distribution Review (RDR) and the world will be a better place.
Well this seems to be what the FSA and a large section of the press has convinced a whole nation to be the case. The reality however could end up being a lot starker once the full implications of RDR are realised.
The bigger issue for most investors should be whether they obtain sufficient value from their IFA for that extra ongoing charge. Managing director of Saltydog Investor, Richard Webb, says “Over the past 2 years we have seen a steady increase in the number of people that are taking personal ownership for the performance of their investments and RDR will become the catalyst for a change in the way many people invest their money, with many more forced to become “DIY” investors in an attempt to avoid the upfront cost of advice”.
It has been shown time and time again that adopting a long term “buy and hold” strategy can result in mediocre results especially during volatile market conditions. Even if the investor is fortunate enough to choose the correct fund in the correct sectors, first time, they will need to remain active with their portfolio. Recent research carried out on behalf of JPM Asset Management, based on discreet monthly performance over the past 18 months, showed that there have been 9 different sectors topping the table and on only 2 occasions did any sector maintain its top position for 2 consecutive months.
The funds held on investment platforms, have increased substantially over the past 5 years. Whilst the low cost of investing is clearly an attraction, it is often the ability to move quickly and effortlessly between different funds that make them the weapon of choice for many investors.