The new regulations will make it easier for investors to understand fund charges and just how independent the advice they are receiving is.
It will also effectively force IFAs to offer a wider range of products to clients.
Kerry Nelson (pictured), managing director of Nexus IFA, says a smaller margin of difference between fees will result in actives coming back into focus. "After RDR, transparency will become more important, so because of that funds will have to get more competitive against each other," she said.
"The average charge on an index tracker is about 0.7 per cent, but you are paying for very little. If you pick the right active funds you can get good performance in rising and falling markets for around 1.5 per cent."
"If you’re prepared to do your research you can build up a portfolio of funds that should do well in all types of market."
"I think trackers are currently popular because people are lazy and they can’t see beyond the fact something is cheap. You get what you pay for at the end of the day."
"At the moment, big platforms are hiding behind their rebates and people are favouring transparent propositions. When houses remove rebates it will become more competitive."
Rob Morgan (pictured), investment analyst at Hargreaves Lansdown, said: "If costs do indeed come down post-RDR, I would expect there to be a significant impact on the passive market, and funds may have to look again at their charges because they could end up competing against one another."Morgan phrases his answer more delicately when asked why passives are currently in fashion.
"In the active versus passive debate there are some who will always be passive, no matter what," he claimed.
"There are some who cannot accept the charges with active funds, no matter the record."
Nelson also has little time for the argument that trackers take on less risk, as the judgement of the manager is not put to the test.
"There isn’t less risk because you’re just following whatever happens to an index, so you are taking the risk that one area will do well," she said.
However, AWD Chase de Vere’s Patrick Connolly (pictured) isn’t convinced that passives will suffer as much as Nelson predicts. "I do think charges will come down in the longer term but it won’t happen overnight, so passive funds will retain a significantly lower cost."
FE Alpha Manager Francis Brooke runs the FE five crown-rated Trojan Income fund with a total expense ratio (TER) of just 1.05 per cent, but Connolly thinks this portfolio is the exception rather than the rule.
"I think the funds that will lower their charges will tend to be the worst performers and advisers will be looking for ways to cut the total cost to clients, which will mean an increase in the use of passives," he finished.