When I joined the industry in 1988, the UK boasted more than 250,000 financial advisers and polarisation had just been introduced.
Over the years there has been one constant – that of independence.
But with the alternative to independence having variously been called ‘tied’, ‘multi-tied’ and more recently ‘restricted’, is it any wonder the consumer is confused?
I recall that when the regulator set up an RDR working group tasked with reviewing the labelling of advisers, this group
initially came up with the term ‘salespeople’ for the restricted sector.
Many multi-tied advisers were up in arms about this term and eventually settled for ‘restricted’.
It now seems the restricted advisers are not happy with that, either.
Some restricted firms appear – intentionally or not – to be clouding the issue and are arguably at risk of misleading the consumer.
In trying to portray themselves as something they are not by using terms such as ‘restricted whole of market’, ‘restricted plus’ and, the latest suggestion, ‘restricted universal’, it would seem there is a desire to position themselves as close to independence as they dare. This suggests that they ultimately believe ‘independent’ is the adviser’s preferred status in the mind of the consumer.
It is really quite simple: if you cannot hold yourself out to be independent then you are, by default, restricted. And if that distinction is embraced, restricted status might – eventually – sit more easily in the minds of both the industry and the consumer. Trying to masquerade as independent by using ambiguous and unhelpful monikers only serves to create confusion and mistrust.
We strive for consumers’ full understanding of what being independent means. We operate solely on their behalf, never favouring a particular group of product providers, and will always have the consumer’s best interests at heart.
Even the FCA has conceded that the meaning of ‘restricted’ may not be clear to consumers, as it is new terminology.
So it is incumbent on all financial advisers to explain their status to their clients – what it is they stand for – and make clear precisely the areas or products they can and cannot advise on.
I suspect the restricted sector would like the two labels to be combined and for everyone to just be called financial advisers.
The RDR review group looked at many possible labels, so how and why would the industry now come up with anything supposedly more appropriate?
Restricted is what these advisers are and I think a consumer could hazard an educated guess that if you are restricted in relation to something then, by definition, you cannot do everything.
Chris Smallwood is chief executive of 2plan Wealth Management