3 July 2020

The Independence Debate

Things are not always what they seem

As is so often the case in life, and in the picture above, things are not always what they seem. 

For example, when is a financial adviser not an independent financial adviser?  When they are a restricted financial adviser!! 

I’ll come on to what that means in a minute, but I make the point for a purpose, a close friend of mine said to me recently on a Zoom call (such is life at the moment) “aren’t all Financial Advisers the same?” and it got me thinking how there must be many others with similar thoughts.  Ultimately it prompted me to write this short blog to explain clearly the distinction.

Before I come on to that, it should be noted that when taking advice on your pensions, investments or hard-earned savings, an adviser or advice firm MUST tell you in writing whether they offer independent or restricted advice. 

That is all very well and good you might say, but what does it mean anyway?  A short explanation of both is shown below and is taken directly from the Financial Conduct Authority (FCA) website: -

Independent advisers

An adviser or firm that provides independent advice can consider and recommend a wide range of retail investment products that could meet your needs and objectives.

Independent advisers will also consider products from a wide range of firms across the market and will give unbiased and unrestricted advice.

An independent adviser may also be called an 'independent financial adviser' or 'IFA'.

Restricted advisers

A restricted adviser or firm can only recommend certain products, product providers, or both.

The adviser or firm must clearly explain the nature of the restriction. If you are not sure about the offer you should ask for more information.

Some examples of restricted advice are where:

- the adviser works with one product provider and only considers products from that company

- the adviser considers products from a limited range of product providers

- the adviser is unable to review existing products that you may already have in place.

Restricted advisers and firms cannot describe the advice they offer as 'independent'.

Hopefully, that clears that one up, not only for my good friend (who now will receive a personal copy of this blog) but also for any of you who have kindly taken the time to read through. 

Ask your financial adviser or wealth manager the question next time you see them and challenge your family and friends to do the same.

For a full list of the key questions to ask a financial adviser – click this excellent link from the Money Advice Service - https://www.moneyadviceservice.org.uk/en/articles/key-questions-to-ask-your-financial-adviser

If you would like to arrange a no obligation discussion about your financial plans with one of our independent (did I make that clear) financial advisers, please give us a call on 01786 431 703 or drop us an email at info@retinvest.co.uk.  We can work with you remotely via video conferencing or indeed face to face when it safe to do so and we like to answer all the challenging questions.