Different types of investment advisers - Financial Conduct Authority

Different types of investment advisers

Last Modified: 07/03/2014
Find out about the different types of investment advice and what an independent or restricted adviser could offer you.

If you are getting advice about investing your money, you need to know there are two different types of financial advisers – ‘independent’ and ‘restricted’ – and this can affect the advice you are given.

Some advisers can offer the full range of financial products and providers available, and are called ‘independent advisers’. But many advisers have chosen to offer ‘restricted advice’ and will focus on a limited selection of products and/or providers.

All financial advisers have to be approved or authorised by us. Both independent and restricted advisers must pass the same qualifications and meet the same requirements to ensure they are providing suitable advice.

An adviser or firm has to tell you in writing whether they offer independent or restricted advice, but if you are not sure which they offer you should ask for more information.

Independent advisers

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'.

Restricted advisers

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 ‘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 which product to buy without having one or more recommended to you.

Buying an investment product in this way might reduce the cost involved but it also means you might not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

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.

Independent and restricted advice: key differences

  Independent adviser Restricted advisers
Will consider all retail investment products Yes No
Can focus only on a particular market No Yes
Can consider products only from certain product providers No Yes
Has to explain to you the type of advice they offer Yes Yes
Can use ‘independent’ to describe the advice they offer Yes No
Incentivised to recommend one product over another No No


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