View more on these topics

SimplyBiz: Less than 4% of IFAs will consider restricted channel

Less than 4 per cent of SimplyBiz and Compliance First advisers say they will consider the restricted advice route post-RDR, according to SimplyBiz chairman Ken Davy.

The support services firm surveyed 500 of its member IFAs and found that appetite for the restricted route dropped further still when advisers realised that the qualification and remuneration requirements are the same for independent and restricted advice.

Davy says he is not surprised by the findings.

He says: “One would not use a lawyer or accountant whose advice was restricted, so why on earth would you take your finances to someone whose advice was restricted to a limited range of solutions?

“Multi-ties were a failure in 2002 and under their new name of restricted advice, I believe they are even less likely to prosper in 2013. The absolute reality is that restricted advice is bad for the consumer and bad for professionalism. 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. It is a road to nowhere for IFAs and their clients.”


News and expert analysis straight to your inbox

Sign up


There are 19 comments at the moment, we would love to hear your opinion too.

  1. How about Ken Davy for chairman of the new CPA?

  2. now that’s an idea Mr Smug. Unfortunately Carlsberg don’t do financial services

  3. “Unfortunately Carlsberg don’t do financial services” Anonymous 9:57 am

    At the moment!

  4. This survey just shows how poor a grasp of the implications of the RDR that most IFAs have.

    Less than 4%? I reckon at least a third.

  5. To compare ‘restricted’ advice with Multi-tie is, unfortunately, to show a rather restricted understanding of the RDR. Multi-ties were doomed to failure from the start because they were based on splitting commission – commission will not exist for most contacts post -RDR. Restricted advisers will not just be tied/bancassurers etc but will include those who want to carry on pretty much as they are, with an effective fee-offset model and advising on the contracts they know and understand. These are firms which do not want to bring unregulated collectives etc into their client discussions with consequent increases to PI and other knock-on effects.
    The FSA should never have tried to cram so many different models into the definition of ‘restricted’, it will be an obstruction to th edevelopment of this channel

  6. agree with Steve Laird – this only shows how little Simply Biz members understand about what it will mean to be Independent post RDR.

    The majority will eventually become restricted unless sense prevails and RDR is abandoned.

  7. Ken is right on the money on this one. Restricted is a blind alley suitable for the flogit and run brigade who are determined to hang on however they can.

    You can use whatever semantics you like, but restricted is not independent. It is second best and I think it is rather illuminating that the life offices are pushing this as hard as they can. You can take that as you please.

    The mooted divisions are absolutely ridiculous – Tied advice, simplified advice basic advice, restricted advice and Independent advice. The only true advice is independent – the rest is flogging.

    Are you going (for example) to ignore Inheritance Tax ramifications when flogging a large investment? Or an annuity when flogging a pension? Advice is what is needed and that remains the province of independents.

    As to the comments that some IFAs are displaying ignorance – well I’m afraid so are those commentators. The failing of the regulation is that although in theory you have to consider everything any normal client will loose the will to live if you actually listed what you are NOT recommending and why. And if you did do that you’d probably fall foul of TCF insofar as you would be accused of padding out the report in order to charge an outrageous fee.

    Surveying the whole market is a concept that cannot be taken too literally and the Canaries will eventually recognise this. What they probably mean is – ‘Please don’t flog just insurance bonds and insured pensions’.

  8. “I’m a fully qualified financial adviser, offering a wide range of financial planning advice. I only deal with providers that I’ve assessed as financially stable, offering competitive products, a track record of delivering, and a strong customer focus. I’m not actually prevented from dealing with any provider, but I have a panel of those I’d prefer to deal with. If you have a need for a product that isn’t available from one of these providers then I can still source it for you.

    I can give you advice on your existing investments/policies/products. I’m not biased by commission, because product providers are not allowed to offer commission anymore, and I’m not allowed to accept it.

    Despite the FSA requiring me to describe myself as offering “restricted advice”, within the limitations I’ve described I’m still required to put your needs first”

    So Mr Davy and Mr Katz, please tell me just what is wrong with the above proposition? And how does it differ from what the majority of IFAs currently do in practice?

  9. Sorry, I have to disagree with Karry on this one and I think John Blackmore and Monsieur Reynard have read the RDR paper correctly. It looks likely many IFAs will have to consider describing themselves as restricted for the reasons John has explained and in the manner Mr Reynard has outlined.
    I do hope however that Harry is right in his last parragraph “Surveying the whole market is a concept that cannot be taken too literally and the Canaries will eventually recognise this. What they probably mean is – ‘Please don’t flog just insurance bonds and insured pensions’.” I will not hold my breath however that they WILL realise this as this will be one way they can get rid off the Independant nature of IFAs and could be their “final solution” to those pesky IFAs…

  10. To Harry Katz @ 13 Sep 2010 7:40 pm

    You said “You can use whatever semantics you like, but restricted is not independent. It is second best and I think it is rather illuminating that the life offices are pushing this as hard as they can. You can take that as you please.”

    Question: really, which life offices are pushing restricted advice.. I know of none doing this, name names man……..

  11. The article misses the point about WOM – most current IFAs see WOM IFA as the golden egg post RDR and in an ideal world would love to play in that market. However, the real costs of research and having a model that fits the new definition will prohibit most IFAs from staying WOM if that is where they actually start out. IFAs need to make a profit and will look at how they operate to service their client banks efficiently. Most IFAs already run a “restricted style” business and do pretty well with their clients in doing so. Most commentators will admit that “restricted” trading has huge attractions to IFAs, it’s just the name tag that misrepresents the deal. 30% + going restricted as all or part of their proposition is my estimate.

  12. Harry, Anonymous | 13 Sep 2010 11:01 am explains some of the reasons why someone mught be forced to describe themselves as restricted as if either your PI does not cover something or your FSA permissions don’t, then you are restricted, you might not be tied, but your recommendations are restrcited at that time and whilst in theory you could apply for a change in permissions or change your PI half way through the year, that is future tense independant, but the advice availabale to the client at that time would be restricted.
    On the permissions side, if a a firm does not have authorisation to do occupational pension transfers, then I assume that would mean the firm would be restricted in the advice they give on pensions, whilst not “tied” to a company.
    The RDR is a can of worms at the moment and as I hav said many times before, whilst the stated aims may be laudable, the combination of VAT issues, restricted advice, capital adequacy and qualifications makes for a high probability of an adviser firm/failing to get one of the four right for 2013…..

  13. I think this article only goes to illustrate how up to date Simply Biz members are with the RDR and how through careful analysis and rational thought they have arrived at some important conclusions. It also highlights that there are still some serious gaps in understanding amongst many other firms who may well be subject to some scaremongering from parties with vested interests. FSA expect firms who want to remain independent to conduct a fair analysis of the relevant market. They have also stated that they expect firms to use research and / or panel services to help with their selection. So as long as a firm has an independent, transparent, robust and repeatable investment process and has access to research software and good compliance support then they will be able to be independent. These investment tools and software are provided free to all firms served by Simply Biz and Compliance First so they can all be very confident of their position post RDR. I cannot see what advantage there is to being restricted given the tools and support IFAs can access. There is no advantage to firms and certainly none to clients.

  14. @Callum. If you are the Callum Mitchell – Relationships manager at Simply Biz ? then I can understand why you might want to see the situation this way BUT the FSA do have form when it comes to making things difficult. I would be amazed if they take your laid-back approach.

    To me the 4% figure simply means that 4% would like to be Independent. How many get lost along the way is another story.

  15. Thanks to Callum who appeared to forget to point out that he is employed by Ken as a salesman for Simply Biz!

  16. @ Callum Mitchell:

    as long as a firm has an independent, transparent, robust and repeatable investment process and has access to research software

    Is this not a sales pitch for SImply Biz’s new broker funds?

  17. As opposed to you who forgot to even point out your name?

  18. Just to calirfy I am indeed a Relationship Manager within SimplyBiz and am proud of this connection just like the 2000 members that we serve. It was never my intention to hide this.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm