The UK’s Retail Distribution Review (RDR) banned commission on advised retail investment products in 2012 because the regulator recognised that remuneration structures created conflicts of interest, distorted financial advice and caused consumer harm. Advisers could be incentivised to recommend particular providers, products or transactions because of how they were paid.
But did the RDR eliminate these conflicts, or simply change how they arise?
Commission was replaced by adviser charging, frequently calculated as a percentage of assets under advice. While this improved transparency and removed product-provider commission bias, it left another potential conflict: asset-retention bias. When advisers earn more by attracting and retaining investment assets, their commercial interests may diverge from clients’ interests in spending, gifting, repaying debt or making alternative financial arrangements.
Now artificial intelligence is changing the balance of power. Consumers can increasingly interrogate suitability reports, examine fees, compare alternatives and identify potential conflicts for themselves. What once required specialist knowledge is becoming accessible to ordinary people.
The RDR removed commission bias. Consumer AI may expose asset-retention bias.
This raises a fundamental question about the future of financial planning. If consumers can independently understand their options and challenge the incentives behind professional recommendations, what will they still need financial planners for?
The answer may signal a profound transformation: from an asset-centred advice industry to a person-centred planning profession.
The future profession may be defined less by the financial capital its practitioners manage and more by the human capital they develop, the decisions they improve and the independence they help clients achieve.
The financial planning profession of the future will not be measured by how much wealth it manages, but by how much human agency it restores.
Part 1: RDR & The Banning of Commission
The UK’s Retail Distribution Review (RDR) banned commission on advised retail investment products from 31 December 2012 because the regulator concluded that commission created conflicts of interest, distorted financial advice and caused consumer harm.
The underlying problem was straightforward:
The adviser was supposed to act in the client’s interests, but was financially rewarded by the product provider.
The Financial Services Authority (FSA), predecessor to the FCA, identified three principal forms of bias.
The three reasons commission was banned
| Problem | FSA’s concern | Consumer detriment |
|---|---|---|
| 1. Provider bias | Advisers could favour providers paying higher commissions. | Clients might be directed towards a provider for the adviser’s benefit rather than their own. |
| 2. Product bias | Different products paid different commissions. | Advisers could recommend more remunerative products rather than the most suitable. |
| 3. Sales bias | Advisers earned commission when a product was sold. | The incentive was to recommend a transaction, even when doing nothing might be better. |
These were explicitly identified in the FSA’s evidence to Parliament. [publications.parliament.uk+1]
A fourth problem: the illusion of free advice
Commission was generally incorporated into financial product charges.
Consequently, consumers often believed they were receiving free financial advice when they were actually paying indirectly through their investments.
The FSA concluded that disclosure alone was insufficient to resolve these problems.
The RDR therefore introduced adviser charging, under which:
- Advisers must agree their remuneration with clients.
- Product providers must not determine adviser remuneration through commission on new advised retail investment business.
- Advice costs must be distinguishable from product costs.
- Consumers must be able to understand what they are paying for.
The FCA subsequently confirmed that the reforms were intended to remove product-provider influence and improve transparency. [FCA+1]
Importantly, the ban was not universal. It principally applied to advised retail investment products, including investment pensions. Commission remained permissible in certain other markets, including protection-only insurance, subject to applicable rules.
But here is the important question for today’s financial planning profession
Did the RDR remove the conflict of interest, or merely change the mechanism through which it operates?
Before RDR:
Sell a financial product and receive commission.
After RDR:
Arrange or oversee investment assets and receive an agreed fee, frequently calculated as a percentage of assets.
The remuneration mechanism changed, but some economic incentives may remain.
Consider three examples:
1. Retaining assets: An adviser charging 1% of assets under advice may have a financial incentive to discourage a client from using £200,000 to repay debt, purchase an annuity or make a substantial gift.
2. Accumulating assets: The adviser’s income can increase as the client’s investment portfolio grows, even if the amount of planning work remains unchanged.
3. Maintaining relationships: An ongoing percentage-based fee may encourage a continuing service arrangement, even where a client would benefit more from occasional, fixed-fee professional assistance.
These are potential conflicts, not evidence that every asset-based adviser acts improperly. Percentage-based fees can also align some interests, and ongoing services can deliver genuine value.
Nevertheless, the structural question remains.
The RDR addressed the influence of product-provider remuneration on recommendations. It did not eliminate every possible conflict arising from the relationship between adviser income and client assets.
The FCA’s post-implementation review found that removing commission had reduced product bias. That was a meaningful achievement. [fca.org.uk]
The distinction I would make for the Academy of Life Planning
The original regulatory principle remains entirely relevant:
Professional recommendations should be driven by the client’s interests, not by the professional’s remuneration arrangements.
At AoLP, we can extend that principle.
A financial planner who does not manage investment assets, receive product commissions or depend on retaining assets under advice removes several important financial incentives from the planning relationship.
That does not guarantee independence of judgment. Fixed-fee, hourly and subscription models have their own potential conflicts.
But it does create a different economic relationship.
The planner can be paid to help a person make better decisions, without needing to secure or retain their investment portfolio.
My central observation
The RDR recognised in 2012 that remuneration structures influence professional behaviour.
That principle should apply just as rigorously to today’s asset-based charging models as it did to yesterday’s commission arrangements.
The RDR separated adviser remuneration from product-provider commission. The next question is whether financial planning remuneration should also be separated from the amount of financial capital a client owns.
That is a powerful foundation for the Academy’s proposition:
Bring me your problem, not your portfolio.
And perhaps the question worth putting to the profession is:
If commission was banned because it created incentives to recommend financial products, why should we assume that charging a percentage of investment assets removes the incentive to recommend keeping assets invested?
The two arrangements are not legally equivalent, but the economic incentives deserve comparable scrutiny.
Sources:
- FSA evidence to the House of Commons Treasury Committee — Retail Distribution Review
- Treasury Committee report — Commission and the RDR
- FCA — Post-implementation review of the RDR
Part 2: Asset-Retention Bias and the impact of AI
I think this could become one of the most consequential challenges facing the asset-based financial advice model.
The RDR removed commission bias. Consumer AI may expose asset-retention bias.
The underlying economic principle is remarkably similar.
In 2012, the regulator recognised that the way advisers were paid could influence what they recommended.
In 2026, consumers increasingly have the tools to examine those incentives for themselves.
Consider a client with £500,000 invested, paying an ongoing adviser fee of 1%.
That represents £5,000 a year in adviser revenue.
The client asks AI:
- Would I be better off paying down my mortgage?
- Should I purchase an annuity to secure retirement income?
- Could I gift £100,000 to help my children?
- Do I actually need ongoing financial advice?
- What would independent, one-off financial planning cost?
- How much revenue would my adviser lose if I followed these alternatives?
Suddenly, the client can see something that may never have been explained clearly.
The adviser’s commercial interests and the client’s financial interests are not necessarily aligned.
That does not establish wrongdoing. But it exposes a potential conflict that deserves examination.
The three RDR biases have a modern parallel
| RDR concern (2012) | Potential asset-based equivalent (2026) |
|---|---|
| Provider bias | Preference for platforms, investment solutions or arrangements commercially beneficial to the firm |
| Product bias | Preference for investment solutions over alternatives such as debt repayment, annuities or spending |
| Sales bias | Incentives to attract, accumulate and retain assets generating ongoing fees |
I would call the third asset-retention bias.
It is more precise than asset hoovering for academic and regulatory discussion, although asset hoovering is more memorable in campaigning.
What changes with AI?
Historically, advisers held a substantial information advantage.
Consumers frequently lacked the knowledge, confidence or tools to interrogate recommendations.
AI changes the economics of scrutiny.
A consumer can upload their suitability report, annual review, charging statement and portfolio valuation, then ask:
“Identify recommendations where my adviser’s remuneration might be affected by the decision. Show me the alternatives and explain the financial consequences for both parties.”
That is an extraordinarily powerful question.
AI will not necessarily identify every conflict correctly. It can misunderstand documents and generate misleading comparisons. But it makes independent questioning dramatically more accessible.
And this creates a new form of accountability.
The adviser no longer controls the client’s understanding of the advice.
The question the FCA may eventually have to confront
If the regulator prioritised consumer outcomes over its growth agenda, this is precisely the question it should be asking.
If commission was prohibited because remuneration incentives could distort recommendations, why should ongoing asset-based remuneration be presumed free from comparable conflicts?
There are important distinctions. A percentage fee agreed with the client is not the same as commission paid by a product provider. Nor does the existence of a conflict prove that advice was unsuitable.
However, disclosure and consent do not automatically eliminate an economic incentive.
The FCA’s Consumer Duty makes this more than a question of professional ethics; it is a regulatory obligation. Firms must be able to demonstrate that their recommendations and ongoing charges deliver fair value and good consumer outcomes. That obligation applies equally when the decision that best serves the client involves spending, gifting, withdrawing or transferring assets—and thereby reducing the adviser’s own fee income.
Consumer Duty should mean putting the client’s interests first, even when doing so is commercially disadvantageous to the firm.
The bigger insight
I think the industry has been concentrating on the wrong AI threat.
It worries that AI will replace financial advisers.
The more immediate challenge may be that AI enables consumers to interrogate advisers’ business models.
Consumers will not need to prove that every adviser is conflicted.
They will simply be able to ask questions that were previously difficult to formulate, let alone answer.
And the firms with the strongest evidence of genuine client value will be best placed to respond.
For the Academy, I would frame the distinction this way:
Institutional AI helps firms defend and deliver their propositions. Sovereign AI helps consumers examine whether those propositions serve them.
The RDR was a regulatory intervention designed to address conflicts of interest.
The next disruption may come from consumers themselves.
The regulator banned commission bias. AI may make asset-retention bias impossible to ignore.
Part 3: The Future of Financial Planning
My projection is that financial planning will survive, but the business model built around gathering and retaining clients’ investment assets will come under increasing pressure.
The fundamental change will not simply be that AI can produce financial plans.
It will be that consumers can increasingly understand the economic incentives behind the advice they receive.
That changes the balance of power.
I think we are approaching a transition from an asset-centred advice industry to a person-centred planning profession.
And the distinction matters.
An industry organised around assets asks:
How much of the client’s wealth can we bring under management?
A profession organised around people asks:
How much capability can we help the client develop?
These questions produce very different business models, professional behaviours and measures of success.
My projection: three phases of change
2026–2028: The age of interrogation
Already emerging
Consumers use AI to examine fees, suitability reports, recommendations and alternatives. The informational advantage enjoyed by advisers begins to narrow.
2028–2031: The age of disaggregation
My forecast
Financial planning, investment management, product distribution and ongoing support become easier to purchase separately. Pressure grows on bundled percentage-of-assets charging.
2031–2036: The age of client agency
Longer-term scenario
Increasing numbers of consumers maintain AI-assisted personal financial operating systems, commissioning human expertise when decisions, complexity or circumstances justify it.
These are directional forecasts, not predictions of specific regulatory changes or adoption rates.
The key mechanism is that AI reduces the cost of understanding, comparing and challenging financial recommendations. That does not eliminate the need for expertise. It changes when expertise is valuable and how it can be delivered.
What the profession could look like by 2035
I expect five distinct models to emerge or expand.
| Model | My projection |
|---|---|
| Traditional asset-based adviser | Survives, particularly for wealthy clients with complex needs, but faces greater scrutiny of charges and value. |
| Investment manager | Increasingly judged on investment-management competence, cost, tax efficiency and measurable outcomes rather than a bundled planning proposition. |
| Independent financial planner | Grows as consumers seek planning without a requirement to transfer assets. |
| AI-supported financial coach | Expands into financial education, decision support, behavioural guidance and implementation assistance. |
| Specialist professional | Commands fees for complex pensions, tax, estate planning, later-life decisions and unusual circumstances. |
The greatest pressure may fall on the middle: firms charging substantial ongoing fees for services that increasingly capable consumers can replicate or obtain more cheaply.
But the best advisers will have opportunities too. AI can reduce their administrative costs, strengthen analysis and free time for genuinely valuable human work.
The commercial shift I expect
FROM ASSET DEPENDENCY TO CLIENT CAPABILITY
Traditional model
Assets retained
Primary commercial driver
- Accumulate assets
- Retain assets
- Charge continuously
- Maintain relationships
Agency-led model
Capability gained
Primary measure of success
- Clarify decisions
- Build capability
- Charge for expertise
- Reduce dependency
The economic challenge for an agency-led profession is real, however. If clients become progressively less dependent on advisers, practitioners need sufficient new clients, episodic work and other sources of income to sustain their businesses.
Our experience at AoLP is relevant here. Trusted relationships and introductions are likely to remain essential, even when the cost of producing a financial plan falls dramatically.
What the evidence already suggests
Three developments make this more than speculation:
- The FCA’s 2025 advice-firm survey found that only around 9% of UK consumers take financial advice. The existing profession serves a relatively small proportion of the population.
- The FCA’s 2026 AI review reported that approximately 11 million UK adults would be willing to use AI capable of acting autonomously within agreed boundaries. That indicates substantial potential demand, although willingness is not actual adoption.
- The FCA has introduced targeted support as a further way for regulated firms to help consumers with investment and pension decisions. The boundaries between comprehensive advice and other forms of support are already evolving.
Yet one countervailing force deserves attention: institutional AI may strengthen incumbent firms. Large wealth managers possess established customer relationships, capital, distribution and compliance infrastructure. They may use AI to reduce costs and protect their position.
I therefore would not forecast the disappearance of asset-based advice. I would forecast growing competition between two approaches:
AI that makes the existing institution more efficient, and AI that makes the individual less dependent on the institution.
What this means for AoLP
I positioned the Academy to develop the profession that comes after traditional asset-dependent advice.
These are my four priorities:
- Own the distinction: Financial planning should be available without the condition of handing over investment assets.
- Build the evidence: Demonstrate how planning improves decision quality, confidence, resilience and human capital.
- Make sovereignty practical: Give consumers their own planning tools, information and records through Academy OS.
- Develop the practitioners: Train professionals to earn sustainable fees for judgment, education, implementation and specialist assistance.
The Academy doesn’t need to claim that all existing financial advice is conflicted or harmful. It can demonstrate that another model is possible.
And there is an important strategic opportunity:
the majority of people who do not currently use advisers may represent a larger future market than the relatively small group with substantial investable assets.
My strongest prediction
By 2035, I suspect the defining question consumers ask financial planners will have changed.
Today:
How much money do I need before a financial adviser will take me on?
Tomorrow:
What can you help me achieve that I cannot confidently achieve myself, with AI?
That is a much tougher question for the traditional profession.
But it is an excellent question for an agency-led planner.
Because the objective is no longer to persuade the client to remain dependent on professional services indefinitely.
It is to help them become more capable, independent and confident.
And that leads to what I think could become one of the Academy’s most important statements:
The financial planning profession of the future will not be defined by how much wealth its practitioners manage, but by how much human agency they restore.
I think the opportunity goes beyond building an alternative business model. We are describing a different definition of professional success: a profession that measures its achievement partly by how much less its clients need it.
