Two very important words: Independent and restrictedVarious sections of the media, including the highly respected financial journalist and presenter of Radio 4’s Moneybox, Paul Lewis, have recently highlighted an issue we too are becoming increasingly concerned about.

Allow us to explain more.

“What types of financial adviser are there?”

Since January 2013 financial advisers have had to choose whether to be ‘independent’ or ‘restricted’.

There is also the ‘non-advised’ option, which is particularly prevalent in the Annuity market; we’re not fans of this approach either, but more of that another day.

Back to ‘independent’ and ‘restricted’, where better to get a description of each than the Financial Conduct Authority (FCA) website?

Independent advisers

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’.

Restricted advisers

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 market

Restricted advisers and firms cannot describe the advice they offer as ‘independent. (Source: FCA)

What’s in a word?

Although it will undoubtedly reduce the choices available, for some consumers choosing the restricted adviser can be the right.

But our concern is that some firms are trying to disguise their restricted status, by using words such as “restricted plus”, “universal” or “whole of market restricted” to describe their services.

This could lead to some consumers believing they are getting independent advice, when that isn’t in fact the case.

“Is Investment Sense independent or restricted?”

We always have been, and intend to remain, independent.

We believe that being able to offer all retail investment products, from every provider, allows us to give the very best advice to our clients.

Since its introduction we’ve seen ‘restricted’ advisers try and present the term in a more favourable light to mask the shortcomings of their restrictions; we know others share these concerns too.

To put it another way, and to quote that other financial expert called Lewis, Martin Lewis: “If you’re using an adviser, always always make sure it’s an independent financial adviser.”

“How can I tell if an adviser is ‘independent’ or ‘restricted’?

It’s very simple; if they can’t use the word “independent” to describe their business, they are restricted.

“Will ‘independent’ advice cost me more?”

Whilst every firm of advisers will set their charges in different ways, we have seen no evidence to show that either option is more expensive than the other.

Which begs the question, if the price is the same, why restrict your options?

We’re ‘independent’ and proud

We passionately believe you will get the best advice from an Independent Financial Adviser.

To talk to one of our team today, call us on 0115 933 8433, alternatively complete our online enquiry form by clicking here, or email info@investmentsense.co.uk

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