Many professionals and clients take a one-sided view of financial advisers, and assume that independent advisers can meet all their needs. Dave Thomas explains, however, how employed advisers offering restricted advice can offer clients a different approach, and should be considered.
Schroders Personal Wealth’s inaugural Money & Mind Report 2020 found that stress and finances are closely linked, with half (48%) of UK adults feeling regularly or occasionally stressed or overwhelmed due to their financial situation.
Nearly half (46%) of those under 35 who have felt financial stress, say that having a financial plan would improve their financial wellbeing, but only 13% said they would speak to a financial adviser about any financial concerns.
Many UK consumers’ understanding of the difference in financial advisers is limited to a one-dimensional view of restricted v independent – a simplistic belief that independent advisers can offer a financial solution to all circumstances. But the choice is more complex than that. It’s certainly true that a restricted adviser without a suitable product range may not be able to cater for all a client’s needs, but many ‘restricted’ advisers offer wide-ranging choices, even if they stop short of ‘whole of market’.
This lack of understanding could be one barrier to the lack of engagement with this subject. So, it’s important for you, as a private client adviser, to know the differences and explain them to your clients, if necessary.
Seven questions to ask the adviser
Assuming a restricted adviser can offer a range of products to meet a client’s needs that are as suitable as those offered by an independent adviser, what other considerations should your clients consider when looking at the overall offering of different advisers? You should consider the following as your starting point.
1) How is the adviser remunerated – do they receive a fee based on money invested, or are they paid a salary? Which would your client prefer?
2) What is included within the advice fee? For example, will the adviser provide a full cash flow projection and lifeplan for the fees paid?
3) Are the charges clear and transparent? Is it easy to tell what you will be charged for and how much you will pay?
4) What other support does the adviser offer within the fees? Is the adviser a one-man band, or do they have the support of an extensive organisation with dedicated professionals providing investment management, compliance and customer service?
5) What does ‘restricted’ advice actually mean? Does the restricted adviser offer a simple choice of ‘in house’ wrappers (e.g. an ISA), containing a wide range of investment choices from a number of different providers? Or does ‘restricted’ mean they only offer one investment product?
6) What qualifications does the adviser hold? Are they chartered? Do they offer specialisms such as SOLLA (Society for Later Life Advisers)?
7) What is the history and reputation of the firm providing advice to your client?
Financial wellbeing is something everyone should be able to to achieve through engaging with their finances and making a plan. It is important for other professional advisers to have a complete understanding of the offer of competing advisory models to make sure they provide their client with the best understanding of the available choices.
Each individual client will value different things, and there is no right or wrong answer for the type of adviser that should be considered. The part any professional adviser should play is to understand and help to make clear the pros and cons of different approaches, so their client is best able to engage with a subject that has the power to be a benefit in their life, both financially and otherwise.
The Law Society partners with Schroders Personal Wealth to help you potentially achieve your goals with a personalised financial plan. Their qualified advisers will work with you to understand your wants and needs to build financial plan that’s unique to you.