The Financial Services Authority's (FSA) regulations around independent and restricted advice mean that most independent advisers are actually operating as 'restricted advisers', according to one IFA practice owner.
Owner of Radlett-based Values to Vision Financial Planning, Nick Lincoln, said that most independent advisers would say ‘off the record' that they operate in a restricted way because they use a limited number of trusted products that work.
Lincoln argued that this is not detrimental to consumers because products are commoditised and as such there is very little difference between most of them.
"An adviser's job is to understand what clients want out of life - they want a financial plan. The product choice is the least important element of advice.
"However, the FSA puts the product at the start of the process. So much of our compliance and time is supposed to be spent demonstrating that we have considered the whole market, this seems insane to me."
"In my view, 95% of the job is understanding the client and their needs, while 5% of it is product selection. The FSA puts this first. But we're not product brokers, we're advisers."
Lincoln explains that recent FSA guidance stating that advisers that use just passive investments should be restricted, would throw more independent advisers into the 'restricted' camp.
He added that it is just one more example of "woolly guidance" from the regulator in this area.
"The regulator's advice chops and changes all the time regarding what constitutes ‘independence'. What if an independent adviser has decided that passive investments suit their clients?
"In addition, the FSA seems to think that advisers using just one or two platforms for their clients are operating in a restricted way. But would it really be in the client's best interests to increase the number of platforms used just to satisfy the regulator?"
Despite his comments, Lincoln does not intend to change his status from independent to restricted.
"The problem is 'restricted' is such a negative adjective," he said.
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