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Restricted access

A recent survey by SimplyBiz which found only 4 per cent of IFAs are considering the restricted advice channel has sparked a discussion about where IFAs will position themselves after the RDR.

The debate intensified when Aifa revealed it will consider holding a member vote on whether to accept restricted advisers into its ranks.
SimplyBiz chairman Ken Davy thinks the majority of IFAs will reject the restricted tag. He says the restricted label is merely a rebranding of multi-tie, which has failed since its latest format in 2002.

Davy says: “Invariably, the end result is that manufacturers and distributors work together to create products that deliver less choice to the consumer at a higher cost.”

Norwest Consultants principal Harry Katz says the restricted route is a “blind alley suitable for the flog it and run brigade” and will always be second-best to full independence. He says: “You can use whatever semantics you like but restricted is not independent, it is constrained. The only true advice is independent.”

But Threesixty partner Phil Young says many IFAs who do not want to give advice on specialist areas will find the restricted channel more attractive.

He says: “The word restricted covers a huge remit of business models beneath it. It does not necessarily mean multi-tied any more, it may just mean independent advisers who do not want to get involved in certain riskier areas. The majority of IFAs do not have clients who need particular types of specialised products.”

Young says even though the qualification requirements for restricted and independent advisers are the same, more IFAs are coming around to the idea of offering a restricted service.

He says: “Many people are focusing on the qualifications. They think that if you have to have the qualifications anyway, then why not be independent. But many of the IFAs we speak to are far more relaxed than ever about adopting a restricted advice model. They are confident that being labelled as such is not as much of a concern as it may have been five years ago.”

Carrington Wealth IFA Steve Laird considers many advisers will find it difficult to meet the requirements needed to remain independent.

He says: “The requirements to be fully independent are pretty onerous because you are going to have to consider absolutely everything for the client. For those of us who like to get involved in the investment decisions, we are going to find it hard to remain independent.”

Laird says there is a lot of misunderstanding over the term restricted and admits it will be hard to let go of the independent label but he says that by doing so it does not necessarily mean that an adviser is automatically tied.

He says: “There is a difference between tied advice and independent advice that is restricted. The difficulty will be for clients trying to determine if their adviser is tied or is independent and just restricted in that independence. It is really important for IFAs to get their heads around how to explain that to clients.”



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  1. This yet another example of an obsession with trying to fix what ain’t broke. Ask any prospective client if he wants to pay £1,500 upfront for a full monty analysis of every single potentially suitable product available (with a write-up to match) or, say, £250 for a set of (justified) recommendations based on what the adviser knows from experience on the road is likely to fit the bill quite adequately and, a pound to a penny, the vast majority will opt for the latter. Why does it need to be any more complicated than that?

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