Restricted v independent advice – key differences and how both can help you

Seeking financial advice when you need it can help you plan for the future more effectively and aim for a better financial outcome. There are two main kinds of advice – independent and restricted. Knowing how these two services work (and what makes them different) can help you assess which is best for your circumstances and needs.

Background to the current advice landscape


In 2012 the retail distribution review (RDR) sought to give consumers more clarity about the different types of financial services available to them, and how much they cost.


The review was initiated by the Financial Conduct Authority to improve the overall service retail investors receive, to elevate industry trust, and to help people make better investment and financial planning decisions – attributes which lacked consistency up to this point.


The types of advice were segmented into two: independent and restricted. It’s important to note that one isn’t necessarily better than the other – it depends on your personal preference.


And like in any industry, it is quality of service that matters, how transparent is the offer and whether you are getting value for money.


Attributes of independent advice


Independent financial advice is provided by financial advisers who have no restrictions or ties to specific providers or products. They can recommend products from the whole UK market – giving you access to a broad range of financial products from various providers.


In theory their pool of options and recommendations should be completely unbiased, but the reality is that even independent advisers will often have long-standing industry relationships and may favour certain providers.  This is not necessarily a negative – putting clients first is the most important factor. However, independent advisers may charge more for their advice and clients may be overwhelmed by the abundant choices they have to face.


Independence may therefore be something of an illusion as the majority of clients of a particular "independent" adviser may end up with similar investment products and/or strategies.


Attributes of restricted advice


Restricted financial advice refers to advice provided by advisers who are limited by either the providers or products they can recommend to a client at the end of the advice process. This is often because the business has chosen to focus on a specific part of the advice market, or because the adviser is relying on research completed by a centralised team. For example, they may not offer specific tax or insurance advice or work with certain financial institutions.


However, this need not be a hindrance for most people – many restricted advisers will have the specialist investment and retirement expertise you need, and the in-depth insights to help you make the most of your money.


Costs can potentially be lower, too, and because their range of products and affiliated providers are more streamlined, the decision-making process for clients can be simplified with more manageable choices.


The benefits of advice, wherever you get it


Good financial advice should put you on a firmer financial footing and it’s hard to understate how much peace of mind an objective view of your situation can bring. Advisers are trained to maximise your potential wealth over time, and to recommend a course of action tailored to your circumstances.


Measurable benefits are evident, too. Research from the International Longevity Centre¹ shows that those who received professional financial advice over a five-year period (between 2001 and 2006 in this case) received, on average, a total boost to their wealth (in pensions and financial assets) of £47,706 10 years later compared to the non-advised.


So whichever advice path you choose – independent or restricted – it’s likely to be in your best interest and could meaningfully improve your financial outcome over time.


Our approach to financial advice


Most wealth managers – big and small – offer restricted advice, as do we at Netwealth. And while we use powerful technology to enhance much of our service, we know that an expert adviser assessing your potential (by phone, face-to-face or virtually) can be incredibly reassuring.


With our personalised approach we strongly believe that bespoke advice is much better to improve the outcome for clients and their families than bespoke investment portfolios.


We offer a wide spectrum of advice – with different packages and fee arrangements – and can help, for example, with allocating your assets more effectively, planning for a comfortable retirement and structuring your resources to cover school fees and care home costs. There are numerous scenarios where our impartial advice can make a difference that counts, saving you some trouble and protecting your wealth.


Of course, you may feel you don’t need advice now, but may benefit from guidance and powerful online tools to better manage your money. We launched MyNetwealth to help you track all your investments in one place, plan for your financial future and gain detailed insights into how to meet your long-term goals. 


If you wish to know more about how we can help, please get in touch.




Please note, the value of your investments can go down as well as up.


Netwealth offers advice restricted to our services and does not provide independent advice across the market. We do not offer advice in relation to tax compliance, personal recommendations with regards to insurance and protection, or advise upon the transfer of defined benefit pensions.


¹ What it’s worth – Revisiting the value of financial advice. International Longevity Centre, November 2019.

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