Financial advisers in South Africa are not confident in the financial regulator’s ability to provide guidance and support related to the impending Retail Distribution Review (RDR).

Over four in 10 (43%) say the Financial Standards Board (FSB) is not competent in providing the industry this vital direction.

More than a third of South African financial advisers (36%) also believe the new regulation will not see light of day until mid-next year (2016).

However the expected impact of the RDR on client numbers is largely positive, and counters a fear that regulation will create ‘advice orphans’ – clients that become uneconomic to service or clients that are unable or unwilling to pay post-RDR introduction.

A year after implementation the majority of advisers (62%) expect no change in the number of clients they service, while Over three years a considerable 38% actually expect client numbers to increase.

The optimism may be buoyed by expectations the review will not strip away some adviser income sources.

However, more than three in five are concerned by the prospects of a complete ban on commissions (63%) and their clients’ resistance to paying direct fees (65%).

Should the regulator choose to take a strictest stance on commission payments – banning them completely – then four fifths of advisers in South Africa face an uphill climb.

Global reforms of the financial product retail distribution arena have led to a serious change in financial adviser business models, remuneration and the way advisers interact with clients around the world.

South Africa is now in the midst of this regulatory overhaul, which aims to build trust between consumers and the financial advice industry by introducing greater clarity about the services being provided by advisers to their clients.

The move towards a new distribution model in South Africa has been on-going since the global financial crisis ended. The latest move was a discussion paper released in November 2014 surrounding the intent of the RDR. The South African advice market is now in some state of flux as financial advisers and businesses prepare to respond to the FSB publication.

With many questions still up in the air ahead of the final implementation of the RDR, a new CoreData report looks into how advisers are approaching changes to their business model. It looks at which types of advisers are best prepared for the changes, and how the impact of these changes will feed down at client level?

Also covered is the confidence of financial advisers in the Financial Services Board in helping them meet the challenges of major changes to their business model.

Advisers also state who they think will be the big winners in the post-RDR landscape and to what extent they feel their own businesses will improve/falter in terms of client numbers in the new world.

The attitudinal part of this paper is composed of survey data from 400 South African advisers that took place in December 2014.