All advisers in the UK will be forced to tweak or completely overhaul their remuneration structure post-Retail Distribution Review (RDR), but the more “economical” advice professionals have a much greater hole to plug as 40% of their revenue is due to be wiped away by the ban on commissions.

Following a UK Financial Services Authority (FSA) announcement regarding trail commissions, any decision or advice given pre-RDR can still command this type of commission after the new regulation comes into play.

But initial commissions will be forbidden and research has shown advisers who currently charge less than their peers, on an hourly basis, will be left with a sizable gap in their income.

The CoreData Research Adviser Fees and Business Models report reveals that advisers who charge £100 or less per hour make 41.7% from initial commissions. Only around 30% of their income can be attributed to fees (both upfront and ongoing).

Almost a quarter of advisers in the UK (23.5%) fall into this group.

In an environment which bans initial commissions, therefore, these advisers will be forced to either hike their prices to make up the shortfall or add considerable volumes in terms of client numbers to bring their income up to current levels.

This contrasts with the more expensive advisers who charge more than £200 per hour and make 56.3% of their income from fees. This group of advisers only takes 24.8% in initial commissions and therefore is bound to be in a stronger position post-RDR.

However, this is true for just 10% of UK advisers.

The two groups in between these two extremes will also have income gaps to deal with. The 40% of advisers who charge between £101 and £150 per hour will be faced with a potential 36% shortfall.

This is the fee bracket home to the largest group of advisers, which suggests that a great proportion of the UK adviser industry will be struggling to make ends meet.

A quarter of advisers falling into the second most expensive fee band, charging between £151 and £200 per hour will potentially face less difficulty.

Currently, these advisers see 29.5% of their remuneration come from initial commissions, which although is still significant may be less damaging.

The whole of the advice community needs to change in the face of RDR, but some just have a much more difficult climb ahead of them.