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Types of Financial Advice

Although financial advisers are all aiming to provide the same professional service to their clients, there are often differences in the advice that can be given and some advisers are restricted in the services they can offer to their customers. All advisers must disclose the range of products and providers that they can recommend and it is important for customers to understand the type of advice they are going to receive. Despite the limitations of some advisers, it certainly does not mean that they offer less valuable financial advice. They may offer all that some customers require.

An Independent Financial Adviser (IFA) is the most well known type of financial adviser. They can give advice on the range of products that are available in the retail investment marketplace in the UK and are not restricted to choose from a specific selection of products or providers. They often have market research tools that look across all providers and products and then choose the most appropriate product, provider and delivery solution for their client. Although they can consider any product in the UK retail investment market, they will often segment their clients into different groups and use a defined investment process to deliver a range of suitable solutions for many of their investment clients.

From 31st December 2012, any adviser giving any form of investment advice that does not meet the definition of independence, being able to give advice on all UK retail investment products, must disclose themselves as Restricted. There will be a variation in types of Restricted Adviser. Some may offer whole of market advice across a range of different products and providers but not quite meet the definition of independence as introduced by the regulator. Other Restricted Advisers may only offer a specific range of products or solutions from a range of providers. A Restricted Adviser could even just decide to provide advice in one single area using only one product provider. As mentioned previously, just because an adviser offers Restricted Advice, it does not necessarily mean that this is any less valuable than independent advice as it may be all that you require, however it is certainly important to understand the type of advice that your financial adviser offers and whether it is suitable for your circumstances.

Advisers that do not give investment advice cannot call themselves Independent Financial Advisers but also do not need to call themselves Restricted. The most common type of adviser where this is relevant is a mortgage adviser. They will however still need to disclose whether they research the whole of the market for their customers or are restricted in the range of products or providers they offer.

The Preferred Adviser database contains all these different types of adviser and you should be able to see whether a firm that offers investment advice is Independent or Restricted. Customer reviews should take any differences in the type of advice into account.

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