Independent or Restricted Advice
Financial advisers now have to offer either ‘independent’ or ‘restricted’ advice and explain what this means for you. It is important to check the status of your Financial Adviser, if you have one, and find out if they are truly ‘Independent’ or ‘Restricted’.
Whether your adviser offers independent or restricted advice can have a big impact on the type and range of advice they can offer.
Here we look at some key differences between independent and restricted advice.
Advisers that provide ‘independent’ advice are able to consider all types of retail investment products which could meet your needs and objectives
Independent advisers can also consider products from all firms across the market.
A ‘restricted’ adviser can only recommend certain products, product providers, or both. This means they might only offer products from one company, or just one type of product.
An adviser offers restricted advice where they work with or for a product provider and only offer advice on the products that the company offers.
Restricted advisers can also choose to focus on a particular market. This might be something like pensions, meaning the adviser will be able to recommend products from all providers that operate in this market.
Restricted firms are not allowed to use ‘independent’ to describe the advice they offer.
It should be made clear to you if you are receiving restricted advice and what that means in practice.
Paying for advice
Whether you deal with an independent or restricted adviser, they can no longer be incentivised to recommend one product over another.
This means they cannot be paid commission through product providers, so you are charged a fee for advice and know how much you are paying.
Independent and restricted advice: key differences
|Independent advisers||Restricted advisers|
|Can consider all suitable 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 you 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|