Should you seek Independent or Restricted Financial Advice? In this short article I look at what each means an their implications.
What does being Independent mean?
I often meet people and when I say that I am a Financial Adviser they ask “are you independent or part of a Company.” I explain that I am part of a Company of Independent Financial Advisers. Independent doesn’t mean that I work on my own. It means that as a Company, we can recommend any financial product from the whole of the market.
Financial Advisers who aren’t independent are “Restricted” Financial Advisers. This means that they are either restricted in terms of the products that they can recommend. Restricted in terms of the providers that they can recommend or both. As a consequence, if they cannot recommend any product from any provider, there may be something more suitable, cheaper or better that they cannot access or advise upon.
For example: if someone had a mortgage on a very low rate and they wanted to raise some capital, unless a mortgage adviser was independent, they may not be able to recommend a Second Charge loan. Therefore, they may have to remortgage at the expense of the rate. Or, when taking out life cover, which is primarily driven by cost, a restricted adviser cannot be sure that they have obtained the best deal available on the open market. There could be another provider offering the same cover at a more competitive rate.
I know there are restricted advisers that offer very comprehensive advice. For some clients it is very important that their adviser can access the whole of the market. This way they know that the recommendation is in no way skewed. Much of the time a client’s choice of adviser is based upon who they like and want to work with.
So should you seek Independent or Restricted Financial Advice? It really is up to you.