There Are 2 Types Of Investment Advice: ‘Independent’ And ‘Restricted’. It Is Also Possible To Obtain ‘Guidance’ (Or No Advice).
If you are getting advice about investing your money, you need to know there are two different types of financial advisers – independent and restricted – and this can affect the advice you are given.
Some advisers can offer the full range of financial products and providers available, and are called independent advisers. But many advisers have chosen to offer restricted advice and will focus on a limited selection of products and/or providers.
All financial advisers have to be approved or authorised by the Financial Conduct Authority. Both independent and restricted advisers must pass the same qualifications and meet the same requirements to ensure they are providing suitable advice.
An adviser or firm has to tell you in writing whether they offer independent or restricted advice, but if you are not sure what they offer you should ask for more information.
An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives.
Independent advisers will also consider products from all firms across the market, and have to give unbiased and unrestricted advice.
An independent adviser may also be called an ‘independent financial adviser’ or ‘IFA’.
A restricted adviser or firm can only recommend certain products, product providers, or both.
The adviser or firm has to clearly explain the nature of the restriction. If you are not sure you should ask for further information, but some examples of restricted advice are where:
- the adviser works with one product provider and only considers products that company offers
- the adviser considers products from several – but not all – product providers
- the adviser can recommend one or some types of products, but not all retail investment products
- the adviser has chosen to focus on a particular market, such as pensions, and considers products from all providers within that marke
Restricted advisers and firms cannot describe the advice they offer as ‘independent’.
Most of the larger and better-known investment houses give restricted advice. These include St James Place, Hargreaves Lansdown and Tilney. (There is also an argument that as Independent Financial Advisers (IFAs) cannot access funds managed by companies such as St James Place can an IFA in fact offer whole of market advice?)
The Financial Conduct Authority (FCA) has provided a useful checklist of key differences between independent and restricted advice for consumers:(FCA) has provided a useful checklist of key differences between independent and restricted advice for consumers: