Almost two-thirds of financial advisers are still not prepared for the impact of the Retail Distribution Review (RDR), according to a survey from fund provider BlackRock.

RDR is due to come into force in just four months, but just 12 per cent of IFAs say their clients understand how the regulations will change the availability and nature of the advice they are offered, according to the July poll of 88 advisers. 

Tony Stenning (pictured right), head of UK retail at BlackRock, said: "With under 130 days until RDR takes effect, many advisers and investors are still wrestling with what the new regulations will mean and how they should act."

"Some advisers are clearly racing to complete the minimum required qualifications, but this is potentially drawing their attention away from transitioning their businesses and communicating potential changes to clients." 

The FSA has launched a new guide today to inform the public about the implications of RDR, which suggests it may share IFAs' concerns over levels of confusion among clients. The pamphlet is available through its website or at Citizens Advice Bureaus around the country. 

However, Tim Cockerill (pictured left), head of research at Rowan Dartington, says he isn’t surprised that many advisers still feel under-prepared, and that informing clients should be lower down on the list of priorities. 

"I think the regulators may have under-estimated the work needed to comply with the regulations; from training new staff to back-office functions there are all sorts of things that need to be dealt with." 

"From a company’s point of view you do not want to be too early to inform your clients, because frankly they are likely to forget." 

"Certainly if you have to decide between getting your exams or informing your clients you obviously have to do the former first, because without your exams you won’t be able to deal with clients. The industry has got to sort itself out first." 

Of the respondents to the BlackRock survey, 61 per cent said they did not feel prepared for RDR, with 87 per cent admitting they had not finalised future client propositions. 

Significantly, 57 per cent said they were unsure of the impact their adviser status – being "independent" or "restricted" – would have on their business, suggesting a high level of uncertainty over the ramifications of the basic elements of the regulation. 

Large fund providers such as BlackRock are positioning themselves to provide more services to advisers post-RDR, and many commentators believe that the passive funds that BlackRock is well-known for will become more popular in a fee-based industry where low-cost investments are set to prosper. 

Last month the company launched the BlackRock Consensus range of funds, the equivalent of multi-manager products that hold index funds. The funds are risk-rated and are designed to form a core part of an investor’s portfolio. 

Some have suggested the concept is a strange one, as multi-manager funds are usually used to gain access to the best managers, but Cockerill suggests a rationale for holding them. 

"It has been shown through various bits of research that 80 or 90 per cent of your returns come from asset allocation, so you could theoretically pick the best funds but get the asset allocation wrong and therefore miss out." 

"This type of product could be sold as a simple way to invest for clients, trying to get the asset allocation right."

If you are an IFA, a client or a private investor and you are unclear about how any part of the legislation will affect you, please leave a comment below or email editorial@financialexpress.net.