Do members of the public understand the difference between independent and restricted advice? In old-fashioned trade title style, Professional Adviser took to the streets to ask them...
Can somebody chained to a fence be said to be free? According to the chief executive of one national IFA, this is exactly what some advisory businesses are claiming.
2plan Wealth Management's Chris Smallwood last week called on the Financial Conduct Authority (FCA) to crack down on what he said was "advice middle ground".
The emergence of terms such as 'restricted universal' or 'restricted whole of market' to describe advisory services are misleading and should be banned, he said.
Is Smallwood right? We asked a small sample of people if they knew the difference between independent and restricted advice. If they did not, we offered an explanation, before throwing in the terms derided by Smallwood, to see what they thought of those. Finally, we asked them what word or phrase they would choose to describe 'restricted' advice.
Here is what they told us...
‘That term seems to be contradicting itself'
Pierre Le Saux, 31, data project manager
"I would take that independent advice means no bias towards a specific scheme, product or company; a person who is going to deliver his best solution based on his market knowledge and experience. I don't know what restricted would mean - restricted in time? Restricted to certain people? Restricted to a geography?
"I would go for an IFA - though even independent advisers are often biased. I think every adviser believes they can beat the market but market history has shown that mutual funds are the only reasonable solution.
"Restricted whole of market and restricted universal advice? Those terms seem to be contradicting themselves. If it's restricted, how can it be universal, or whole of market? I think restricted might be better described by what the restriction itself is, so maybe ‘special situation advice'; ‘VIP advice'; ‘UK only products advice' or ‘socially responsible advice'. Something like that.
‘Unless you've money to invest, you'll never come across those terms'
Geoff Jones, 63, retired
"I think an independent adviser is somebody who is not attached to a particular bank or building society, like a freelance. But I don't know what restricted advice means - maybe it's people who work for a bank who are supposed to give you independent advice?
"Unless you have money to invest, you will never come across those terms. We received an inheritance recently and went to the bank, which advised us to go to an independent adviser. They were concerned we were not looking far enough. [But] the independent tag wasn't important to us; we didn't think we had sufficient funds to warrant that.
"I think maybe ‘limited access' would be a better way to describe restricted advice."
‘I have never heard of restricted advice, but it makes sense'
Liz Roberts, 59, retired
"I would assume an independent adviser means somebody who perhaps did not work for a specific bank.
"I have never heard of the term restricted advice but it does make sense. It makes you think that not all of the doors are open and you are not going to get access to everything.
"Restricted whole of market advice I don't think means anything. I guess it could mean that there are some things we cannot access. But I would think advisers working under that label [whole of market] should be able to offer me anything."
‘An IFA gives unbiased advice based on fair analysis'
Nina Bruening, 32, events manager
"I think an independent adviser would give me unbiased advice without any restrictions based on fair analysis. They would advise on a wider range of products than restricted advisers, who I would think are restricted to a certain product range.
"Restricted whole of market advice, I imagine, would mean whole of market advice is offered for only a specific product like pensions.
"I think restricted advice could be better described as ‘focused on a limited range' of products or providers, so ‘limited advice'."
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