Types of investment adviser

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 what 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 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.

Buying an investment product in this way might reduce the cost involved but it also means you may 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