New rules governing how investors pay for the advice they receive from their financial adviser came into force in January 2013. What is the RDR is all about, and what has changed?
‘As a firm, and as individuals, we intend to behave towards our clients in a way that is honest, open and competent and with integrity always acting in the best interests of the client, having ensured that we have an informed understanding of their needs and desires.’
Independent Financial Advisers (IFAs) are rightly proud of their Independent status and they are easily identifiable by the IFA logo found in the bottom right-hand corner of this page.
In essence, Independent Financial Advisers have NO TIES with, or any commitments to any of the providers of the arrangements that might be recommended to you. An Independent Adviser is committed and obliged, by nature of his or her regulated status, to give you advice sourced from the whole market and not from a few chosen providers.
We, at Ward Williams Financial Services Ltd, strongly believe that Independent advice is the best advice that you can get. This is the only way you can be sure that the adviser you are dealing with has your best interests in mind when advice is given. It is the only way, also of ensuring that you have the best options available when you come to pay for the advice.
All advisers are personally regulated by the Financial Conduct Authority (FCA) and it is possible for an adviser to be regulated in three ways:
When you receive advice from a Tied Adviser, he or she can only make recommendations that relate to the provider to whom they are tied. This result is that it limits the choice of provider to one. The product recommended will be the product only of that provider and, it will not necessarily be the most suitable/most cost effective/best performing/most flexible. It will just be the product offered by that provider. Many high-street banks, building societies and life insurance companies with direct sales teams operate this way.
A multi-tied adviser has links with more than one company so in theory can offer greater choice. However, there is no guarantee that there is more choice – they may just use different providers for different products – for example, they may use one company for life assurance but a different company for pensions. In this way, and for a particular product, they are similar to a Tied Adviser.
A Tied Adviser matches a client to a product rather than a product to a client.
An Independent Financial Adviser, however, works hard to understand the client, their circumstances, their needs, hopes, fears and dreams. In order to help them, a particular product, such as life assurance, may be suitable. In the case of the IFA, they will then research the whole market to find the, most suitable and most cost effective product undertake from the whole market that best fulfils the clients’ requirements.
All advisers will seek to be remunerated for the work that they do. All advisers have to set out how they are going to charge, and how much they are going to charge in advance of providing advice.
IFAs are the only advisers who MUST give you the option of paying for this advice by way of fee rather than commission. This means that they offer more flexibility on how they charge for their services.×