MONET MATTERS BY SCOTT WOODS: Be clear on what your adviser is offering you

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Financial advisers, wherever they work, now have to offer either “independent” or “restricted” advice and explain what this means for you. Whether your adviser offers independent or restricted advice can have a big impact on the type and range of advice they can offer.

Here we look at some key differences between independent and restricted advice:

Independent advice: Advisers that provide ‘independent’ advice are able to consider all types of retail investment products which could meet your needs and objectives.

Independent advisers can also consider products from all firms across the market.

Restricted advice: A “restricted” adviser can only recommend certain products, product providers, or both. This means they might only offer products from one company, or just one type of product. An adviser offers restricted advice where they work with or for a product provider and only offer advice on the products that company offers. Restricted advisers can also choose to focus on a particular market. This might be something like pensions, meaning the adviser will be able to recommend products from all providers that operate in this market. Restricted firms are not allowed to use “independent” to describe the advice they offer.

It should be made clear to you if you are receiving restricted advice and what that means in practice.

Changes to the way all advisers are paid and the information they have to give you about it have now taken effect, under the Retail Distribution Review (RDR).

Advisers should discuss fees for any advice given before work is undertaken. Typically fees could be charged as an hourly rate; a set fee according to the work involved; a monthly retainer; or a percentage of money invested.

However you pay for advice, your adviser should set out the charges in a clear and transparent way and make sure you understand how much you are paying.