Types Of Advice
We don’t feel there are better people to explain the different types of financial advice than our regulator, The Financial Conduct Authority.
This is its definition of the types of financial advice:
An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives.
Independent advisers will also consider products from all firms across the market, and have to give unbiased and unrestricted advice.
An independent adviser may also be called an 'independent financial adviser' or 'IFA'.
A restricted adviser or firm can only recommend certain products, product providers, or both.
The adviser or firm has to clearly explain the nature of the restriction. If you are not sure you should ask for further information, but some examples of restricted advice are where:
- the adviser works with one product provider and only considers products that company offers.
- the adviser considers products from several – but not all – product providers.
- the adviser can recommend one or some types of products, but not all retail investment products.
- the adviser has chosen to focus on a particular market, such as pensions, and considers products from all providers within that market.
Restricted advisers and firms cannot describe the advice they offer as 'independent'.
Other types of financial advice
If you are only given general information about one or more investment products, or have products or related terms explained to you, you may have received guidance rather than advice. This is sometimes also called an information only or non-advice service.
The main difference between guidance and advice is that you decide what product to buy without having one or more recommended to you.
If you are not sure whether you are receiving guidance or advice, and therefore how you would be protected, you should ask the adviser or firm to explain.