Do you know the advice difference….
If you are either getting or thinking about getting advice about investing your money, you do need to know that there are fundamentally two different types of financial advisers;
This may affect the advice you are given.
Some advisers can offer the full range of financial products and providers available, and are called independent advisers (often known as Independent Financial Advisers – IFA’s).
Many advisers have chosen to offer what is called restricted advice (and the numbers going down this path seem to be increasing for various reasons) and they will focus on a more limited selection of solutions, products and/or providers.
All financial advisers have to be approved or authorised by the Financial Conduct Authority (FCA).
The adviser or the firm must let you know in writing whether they offer independent or restricted advice, but if you are not sure (because it can be confusing sometimes…) what they offer, then ask them to clarify and better, in writing.
Independent advisers or IFA’s
An adviser or firm that provides independent advice can take into account and recommend all types of retail investment products and from all providers that might meet your requirements. So you should be able to get a broader spectrum of solutions.
Their advice should therefore be unbiased, independent and hence “not restricted”.
The restricted adviser or firm can only recommend certain products, product providers, or both. This can be because they are tied or linked to one particular organisation or operate on a restricted panel basis where they can consider more than one solution, maybe multiples, but not all.
The adviser or firm must explain the nature/basis of this restriction to you.
In addition, the adviser may have chosen to focus or specialise on a particular market, such as pensions.
Restricted advisers and firms cannot describe the advice they provide as independent and whole of market, since it’s clearly not.
…and where does the robo fit in?….
To add a bit of future confusion, new automated propositions (robo or cyborg as some call it) are challenging the regulator’s definition of advice of independent and restricted. As it stands no pure automated, or robo service, assuming it is in fact providing advice, can give itself the label of independent. However, there is scope for the IFA firms to use robo services to increase their offering to clients, without losing independent status. On this one I’m sure, there will be much industry and regulatory debate in the future.
If you need independent advice enquire here