What is the difference between independent and restricted advice?
There are 2 types of investment advice: ‘independent’ and ‘restricted’. It is also possible to obtain ‘guidance’ (or no advice).
Independent investment advice
Independent advice is based on whole of market research on all types of retail investment products appropriate to your objectives and requirements. Independent advice must be given without bias or restriction and must consider products from all providers or firms.
Restricted advice is exactly that, restricted. The restriction can be on the types of products an adviser or firm is able to recommend, the provider they can recommend, or both. For example:
- a restricted adviser may focus on one market, such as pensions, and can consider products from any provider in this market;
- a restricted adviser may only work with one provider and consider only their products when making a recommendation; or
- a restricted adviser may consider products from some, but not all, providers.
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:
|Independent advice||Restricted advice|
|Will consider all retail investment products||Yes||No|
|Can focus only on a particular market||No||Yes|
|Can consider products only from certain providers||No||Yes|
|Has to explain to consumers the type of advice they offer||Yes||Yes|
|Can use 'independent' to describe the advice they offer||Yes||No|
|Incentivised to recommend one product over another||No||No|
No advice is often referred to as ‘guidance’, wherein a client is only given general information and must decide, for themselves, the most suitable.
Our advice always has been, and remains, independent. For more information speak to a financial adviser who can explain more about what makes us independent.