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Is restricted advice losing traction?

Money Advice Service advertNew figures from the FCA show that the percentage of restricted financial advisers within the sector has dropped since last year.

Data from the regulator’s Financial Advice Market Review last June looked at the advice on offer within the sector, finding that 83 per cent of firms were providing independent advice, and 15 per cent were restricted. Two per cent of firms provided both types of advice.

A Freedom of Information request by Money Marketing columnist Paul Lewis shows that as amount of financial advice firms has dropped from 5,746 last June to 5,270 as at 26 February 2018, now 13 per cent provide purely restricted advice.

Two per cent continue to provide a mixture of both.

What does ‘restricted’ advice really mean nowadays?

The amount of firms providing solely restricted advice was 546, or 13 per cent, well behind the 848 firms who were providing restricted services last June.

However, the data also shows that the proportion of individual staff advising on retail investments is still split equally between independent (43 per cent) and restricted (42 per cent) advisers.

Along with the lack of measurable growth in the restricted market, the regulator’s review of advice suitability from 2017 shows that initial charges for independent advice remains lower than for restricted advice.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. I’m in the 2% and doing great thanks.

  2. You do need a further breakdown – within the restricted section what proportion are whole of market i.e. restricted by product range , or by provider i.e. tied,single or multi-tied in ‘old money’

  3. Work from panel, no matter how often you review it – you are restricted. In any event lose the tags we should all be referred to regulated financial advisers and leave it up to individual firms what they choose or choose not to advise on

  4. I am ‘restricted’ by product range but within those areas that I do work I am ‘independent’ – using the old terminology that consumers had finally begun to understand.

    Indeed, I would argue that our research and advice is superior to many of those firms that espouse ‘independence’.

    Yet again I am struck by the futility of the whole exercise where, in truth, the typical consumer does not care.

  5. It’s not about products per se, it’s who you act for and in what capacity.Personally I can’t see why one would choose to be tied (which was a better description than the nonsensical restricted term) in today’s market but that’s just my view.

    For too long the focus has been on product sales, despite RDR and not on financial planning. Look at the British Steel pension scheme debacle as an example.

    Obviously the MIFID definition of independence is different so presumably the ‘restricted’ monicker will be removed and we get back to independent or tied. Much clearer.

  6. The real; question is – Did they ever really have traction?

    From the figures you can see that 90% are independent – that in itself speaks volumes and is really all you need to know.

    Duncan Carter has it in a nutshell.

  7. What dose Restricted actually mean, As an IFA my clients fully understand we are Independent of any Financial inducements/Target Income/ Product Bias’s / We are at complete liberty to agree our remuneration directly with the client, Which is then directly used within our own business, if you are Dispersing to a Higher “Up the Food Line” Third Party,”Any” of the Initial or On-going Advice Fee, then you can not be independent, Normal Regulatory and Business Costs are within Our Advice Fee, to say SJP and its like is restricted is absolute obfuscation, really lying and misleading, The Regulators have fundamentally got this one wrong.

  8. The bigger picture here is that the Regulator has put Independence on the back-burner to some extent. Mifid II has loosened the definition of independence and tightened up on the definition within restricted firms.

    The regulator is happy for Independent firms to operate and review panels, as restricted firms do.

    The regulator also has major concerns about vested interests within restricted firms and it is pretty clear that there is only one real winner when restricted firms have their own investment funds, especially when they ignore all the evidence and use expensive Multi-Manager funds. Or simply keep their scale to themselves and their shareholders and don’t pass any back to their customers.

    Individual advisers will dictate the market and it is pretty clear that most have chosen to ignore the sales pitch.

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