Ernst and Young has forecast that advisers have failed to consider the changes to their value proposition and business models post-RDR.

Its latest report ‘Dawn of an era’ is the follow up from ‘Brave New World’ earlier this year which forecast the RDR would turn customers away from retail funds.

This month’s report focuses on how providers and firms are preparing for the RDR.

Writing about the RDR, senior manager Sara McLeish said advisers were too focused on qualifications and not on the long-term of their business.

“Many advisers have, understandably, focused single-mindedly on obtaining qualifications and deciding how to operate adviser charging.

“They have often left themselves far less time to consider the more fundamental changes they need to make to their value proposition and business model in order to build a sustainable and thriving professional firm in 2013, or to socialise this new proposition with their clients.”

This mindset was also a downfall of banks and insurance companies.

“Many insurance companies and banks are focusing on the immediate and the practical implications of RDR, spending less time considering the potential realities of the post-RDR world and what that means in terms of product and distribution strategy or their competitive positioning,” she said.

The report also highlighted the benefits of restricted advice following guidance from the Financial Services Authority’s guidance paper on independent and restricted advice.

Ms McLeish said: “We have long maintained that the restricted advice route is likely to prove lower risk, lower cost and- ironically- less restrictive than the independent route, and this Guidance Paper confirms our view that there is likely to be limited competitive advantage in independence status in the post-RDR world.”