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Gill Cardy: Be upfront about being restricted

Cardy Gill IFACentre MM blog

As someone wisely observed, clients need clarity not a dictionary.

The regulator doesn’t have a good record on plain English, but the introduction of the term restricted to the regulatory lexicon was intended to bring such clarity, with the stark simplicity of stating that restricted advice is any personal recommendation which is not independent advice.

It is financial services providers and distributors, worried about losing clients, distribution or profits, who have muddied the waters for the clients, not the FSA.

The FSA is accused of changing its definition of independence: it has, but not in the way that many think. Previously, you could hold yourself out as independent if you offered clients the opportunity of paying fees and you provided personal recommendations on packaged products from the whole market or the whole of a sector of the market.

Think back. We had tied advisers, tied to the products of their own company or selling the products of one company. We had multi-tied advisers selling from the pre-determined panel of providers.

But we also had ‘IFAs’ who simply directed all their clients into their own in-house portfolios. We had ‘IFAs’ not permitted to go off-panel. We had firms advising clients on just one sector of the market, such as investments, under no obligation to disclose that restriction.

So, now we have a binary choice : independent or restricted. No Fifty Shades of Grey here.

It is crystal clear that there are advisers who because of their own choice, their network’s choice, their firm’s product range, their investment strategy, or their business model will limit (restrict?) their consideration of some sectors of the market when advising their clients.

And packaged products? Good advisers never restricted client advice to packaged products. You always talked about cash, debt, budgeting, cashflow, National Savings, tax and estate planning, lump sum investment trusts, state pensions and benefits, property, commodities, shares, discretionary investment management. No change there then.

My challenge for 2013 is this: for those advisers, wealth managers, product providers, networks and nationals who have adopted restricted business models, stop trying to hide your status and make clear that you are delighted to provide financial advice to your clients on a restricted basis.

Get your marketing and PR teams to extol the benefits of restricted advice and stop hijacking words like impartial (which is as open to misinterpretation as Independent for those who want to trade dictionary definitions).

Stop using words like “professional” or “qualified” as if they set you apart (they don’t – we’re all professional and we’re all qualified).

Start using the word restricted, clearly, up front, on your home page, on social media profiles, on openly available disclosure documents – otherwise your clients might think you have something to hide!

Gill Cardy is managing director at IFA Centre


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There are 33 comments at the moment, we would love to hear your opinion too.

  1. Having started as an IFA in 1992, but spent 1993-98 tied, I had no problem selling the benefits of tied advice as there are some for clients. As Gill says however, impartial, qualified are NOT a benefit of a restricted service to a client.
    I intend remaining Independant and with a little extra work (paraplanner involvement I think) should beable to denmnstrate it. Were this to prove unfesable I would become restrcted & “sell” the benefits, not hijack termswhich apply to others

  2. Agree fully Gill. Those Restricted advisers who specialize should be proud to say so. They will have no need to spread themselves too thinly, trying to know a little about everything.

  3. Good article Gill, you raise a very good point about the new (non percieved) clarity in this industry now.

  4. Ah Gill – if only! Not everyone is a Phil Castle. In fact (as you have pointed out) there are those who have made a fetish of trying to obscure, obfuscate and mislead,

    What you put forward is I think undeniable logic. However, appealing to those who see it in their interests to mislead, to ‘come clean’ is not only a vain hope but is actually what the Regulator should be overseeing. They made the rules – it is now up to them to enforce them effectively. Unfortunately I see them lamely sitting on the side lines viewing the road crash of their creation and wondering how they (let alone us or the public) can make sense of them.

  5. Hi Gill – would you not agree that it would be a really good start if the FSA Register highlighted a firms status ??
    I have recently been completing a study on Restricted / Independent and agree that there is no rush to transparency from the restricted side

  6. David Trenner - Intelligent Pensions 5th February 2013 at 10:21 am

    “Definition of independent: adjective

    free from outside control; not subject to another’s authority”

    The Zurich salesman is clearly restricted. The pensions specialist is clearly not – until you change the definition as FSA has.

    Phil Castle highlights what a nonsense this is: he is going to remain independent … by using a non authorised paraplanner to cover the areas he cannot cover!

  7. It is sad that advisers are squaring up against each other in an “I’m better than you” face-off.

    The reality is that the FSA has dismantled the clear demarcation between independent and non-independent.

    This initially occurred when Gill’s friend David Severn pushed through the de-polarisation changes. Latterly, not content with muddying the waters, the FSA has rewritten the dictionary definition of independent into one that consumers do not understand.

    Conveniently, instead of lambasting them for utter stupidity we seem intent on arguing amongst ourselves over what is best and clambering for the moral high ground.

    Let market forces work and forget the petty squabbling. That’s my theory.

    Surely that’s enough to get me onto some profitable sub-committee somewhere…right?

  8. Gill, why are you preaching to the restricted advisers?
    I thought you were head of “I”fa centre?
    The FSA has brought about this confusion, blame them.

  9. Saying or shouting something doesn’t make it so.

    David Trenner’s quoted definition of independence is simple and clear. The current FSA definition isn’t.

    As a client I can seek advice on a pension transfer, long term care and a portfolio of securities. I call up my local independent adviser only to be told he or she can’t help with any of that – despite the loud and proud ‘Independent’ banner.

    I then call up a restricted adviser who looks across the whole market who then proceeds to assist with it all.

    So that’s clear then is it?

    The inconvenient truth is that the FSA changed the definition and messed it up. It’s not anyone else’s fault. But let’s not kid ourselves that ‘independent is necessarily better than restricted in this brave new world.

  10. “The inconvenient truth is that the FSA changed the definition and messed it up. It’s not anyone else’s fault. But let’s not kid ourselves that ‘independent is necessarily better than restricted in this brave new world.”

    Well said. If I wanted complex specialist advice I would certainly look at Restricted Offerings. The FSA have in so many ways made life more difficult for the Independent adviser.

  11. Isnt it funny how all things dreamt up by an FSA commitee (or any other come to that) to buck markets fail.

    Free Markets in EVERY walk of life always decide what succeeds and what fails – thats what will determine the fate of Independence, fees/commission, increased qualifications and ultimately the whole RDR – not long now before it all goes tits up !

  12. “Well said. If I wanted complex specialist advice I would certainly look at Restricted Offerings. The FSA have in so many ways made life more difficult for the Independent adviser”.

    What is it exactly that IFA’s cant do that a “Specialist” can do?

    I advise on (complex) pension transfers, long term care etc etc etc, in fact everything apart from run a discretionary managed portfolio and have done for more years than I can remember.

    Am I missing something or have the “Specialists” passed a special exam or see special clients that are not available to us mere IFA’s.

  13. David Trenner Intelligent Pensions 5th February 2013 at 1:51 pm

    @confused I have passed more than 20 professional exams, but I do not consider that I should advise on mortgages, peps, savings plans, protection as I do not consider that I know enough about them. Either you are a Jack of all Trades, or you should be using your huge brain to sort out the country’s economic problems!

  14. @confused

    The point is that you don’t have to do these things to use the ‘Independent’ label but you can do these things if you are restricted.

    To be able to use the ‘Independent’ label you have to provide advice on a restricted range of products. Note the words restricted and products. Of course you can go beyond this but then so can a ‘restricted’ adviser and on a whole of market basis.

    So what exactly does the ‘Independent’ label tell the consumer? Another inconvenient truth is “not a lot”.

  15. Gill, you are so right, why not be proud to announce to the world that you specialise in certain areas. If you chose only to advise on Equity release, or Pension Transfers, be proud! If you only want to be focusing on critical illness, income protection, equity release and mortgages then state you are restricted advisers.
    Don’t then try to justify yourself by saying things like:We are whole of market, which means we are unconstrained and can select the most suitable plan or arrangement for your circumstances.or ‘We are independent of any insurance company or mortgage provider which means we work on your behalf providing an unbiased advice’as this frankly reeks of an IFA wannabee and could be thought to be ‘passing off.’
    If you are a genuine specialist, particularly those who offer consultancy to IFAs who are not qualified to deal with certain subjects, like David Trenner, I would shout about the restricted model from the housetops.
    But others, the advisers who sell only their own in-house product or will not look at the whole of market because of ownership or other financial considerations should be forced to ring a bell and shout ‘unclean’ from their home page, business card or first statement on first meeting.

  16. @Hickky

    Stirring stuff but rather detached from reality and the facts.

    To call yourself independent you have to provide advice across the range of retail investment products defined by the FSA. Nothing more, nothing less, that’s it. Whether you you do any or all of the other bits matters not a jot. Fact.

    In principle what Gill and the others here are advocating is right and proper. The problem is that the FSA’s new rules have pooped in that particular coop.

    What’s more important in the new world is whether you’re tied to a provider but the FSA have singularly failed to provide a word for that.

    There are a lot of people who were legitimately independent under the old regime and who will be doing exactly the same now but are now ‘restricted’. I don’t recall Gill et al. campaigning against these people using the independent label pre-RDR. Curious that. I suspect that evangelical attachment to the independent label transcends the FSA’s mutilation of the term.

  17. Confused?
    You will be

  18. @ confused – David Trenner has already made the Jack of ALL trades point.

    As an client in need of complex advice I would prefer to take advice from a Restricted Specialist with say Q level 6 minimum than from an Independent Adviser with nothing better than level 4

    For simple, everyday “products” on the other hand none of these qualifications are really necessary.
    The new qualifications were introduced for largely political reasons – to give the impression that the industry was becoming more professional.

    For the bulk of products sold today Restricted is just as good as Independent and for complex cases often much better.

  19. @ David Trenner – The only area i am not authorized for is occupation al pension tfs BY choice. I have LTC, LTM, MAQ, lvl4, am studying for StEP & IFQ. The paraplaner I am considerng using is a lvl6 cfp and my trainee has a degree in economics & acounting so is part way to lvl 4 and advaned & will either paraplan or advise in due course, so I thik your jibe somewhat unfair.

  20. Interesting insight from MAS to add to the debate.

    Quote: ” All financial advisers are authorised and regulated by the Financial Services Authority (FSA). This means that regardless of whether they’re independent or restricted, they must hold minimum qualifications, subscribe to a code of ethics and keep up to date with the financial markets through continuing professional development.

    Therefore the quality of the advice you receive will be the same, whichever type of adviser you go for.”

    So it really is ” Never mind the width, feel the quality.” … or is it?

  21. @ phil – I don’t think David Trenner was making a jibe.
    There is a serious question as to whether any one individual can really be expert in all areas. Had the FSA allowed Individual specialists to come together in a practice there would have been no problem. As it is you are solving the problem by using others which is fine. This papering over the cracks approach could have and should have been avoided by continuing to use the more normal definition of Independent.

  22. @ John I do not disagree with you when you say “This papering over the cracks approach could have and should have been avoided by continuing to use the more normal definition of Independent.We are however where we are and at least Gill is trying to ensure issues are made clear. In doing so, it should then be fairer to the restricted whole of market specialists you refer to. At the IFA Centre seminar last week, Gill showed us “Independence Checker : the ‘bridge process’ between the factfind and detailed client research
    Please contact Matthew Morris ( ) or check out
    Personally were i to choose to specialise, then I would use this to identify other needs I do not want to personally implement and then refer on with this clear audit trail, I would then continue feel justified to continue calling myself Independant, whilst referring based on this evidenced decision making process.
    If I can persuade Matthew Morris to offer a lower cost for firms with under 5 RIs, then I’ll probably take it up to help me evidence process as although I am qualified for mortgage advice, I hate doing mortgages and often refer to another IFA to the mortgage work (although of course, he doesn’t need to be an IFA to do this, nor actually a regulated individual, he could work directly for me but wants to remain a directly regulated IFA as he has his level 4 too).

  23. I am more than well aware that there are some highly skilled specialists out there, but I’m afraid that the ‘jack of all trades’ epithet doesn’t wash.

    The true value of an independent is that he/she is able to provide holistic advice. How would you feel taking your car in for a service only to be told ‘OK we can do the fuel injection, but you’ll have to go elsewhere if you want the brakes checked’.

    I’m not arguing that the mechanic, or the adviser, has to be qualified and able to do the job, but presuming that he/she is, then that’s what independence is all about and what the FSA has been driving at. What remains unclear is how the FSA or FCA is going to ensure that those who maintain that they are independent truly are. And yes there were those prior to 1 January who were not entirely happy that there were those putting themselves forward as independent were, to be kind, stretching the truth.

    An additional and in my view no less important test of independence is the ability to set your own tariff and be truly independent in ownership and financial structure. At Göethe so aptly put it:
    Du must herrschen und gewinnen
    Oder dienen und verliveren

    (You must be a master and win,
    Or Serve and lose)

  24. Intereresting if insular debate that rather misses the point.

    It’s how the client or potential client understands the rather esoteric differences that concerns me.

    I can’t see it’s any easier for them to understand than it was before arguably it’s even more opaque.

  25. @Harry Katz

    I find myself agreeing with your philosophical approach but not with your interpretation of reality.

    The FSA have decided that the ability to call yourself independent is solely down to the range of investment products you advise on.

    What you, Gill et al. would be best advised to do is campaign to get the definition of independence put right rather than try and con the public and the rest of us into believing its something it isn’t.

    I would whole-heartedly agree with your view on what independence SHOULD be. The FSA don’t agree. Calling a cat a dog does not make a cat a dog.

    As Goethe put it…

    “A person only hears what they understand”

  26. @Harry the car analogy doesn’t work as a lot of mechanics don’t do MOTs or revover your broken down car. I take my car jn, it is serviced & they take it across the road for me to be MOTd

  27. @ Grey Area
    Who can argue with those points? Of course you are right, but that doesn’t stop one aspiring. As a likeminded Göethe fan I’m sure you know that he said many things often contradicting one quote with another, but I particularly think this one (in English) is apposite:

    “I love those who yearn for the impossible”. Is a pure independence an impossible dream? If you live it then it is so – you don’t need to cleave to another’s definition. If you are independent by theirs and by your own, then you are. So to plagiarise Shakespeare “To thine own self be true”

    Enough of these literate philosophical meanderings!

  28. @Harry Katz

    As you point out, the good thing about quotes is there is one for all occasions and all sides of an argument. And, of course, if it’s a quote it must be true.

    Einstein is supposed to have said “If the theory doesn’t fit the facts, change the facts.” I rather suspect this was what the FSA’s RDR team had as their slogan…

  29. An FSA director said “better than nothing” to my assertion that a tied bank adviser was flogging ASU under the guise of PHI (Yes I am old).

    If a restricted adviser has no access to a product he/she is aware of and knows is the most suitable for the customer is he in breach of any rules and regs by not informing said customer?

  30. @Evan Owen

    There is ‘guidance’ in ICOBS 5.3 that suggests any adviser, restricted or not, should inform the client if all their demands and needs are not me.

    So, no explicit rule-breach but not good form either.

  31. Sometimes Gill I get the feeling you were planted in this industry by the FSA !!

  32. Gill Cardy , I gave you an opportunity a year ago to show your worth. You failed miserably and showed you had no teeth and also that you were no better than Aifa as was who also failed its members. Not only that , you also failed to understand how a bond worked and were clueless as to how commission worked. How you have the nerve to write these articles is frankly baffling me !!!

  33. at anon. why post anon and then make comments about Gill like that. Use your real name and join the debate publicly & stand by your comments or shut up. I don’t agree with Gill on everything, Nor do I agree with my wife on everything, in fact, I don’t always agree with myself with the. benefit of hindsight, but I respect people’s right to have an opinion, howevervNOT when making snude remarks while staying anon.

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