What's the Difference?

emmaHarris_2

Could someone explain the differences and maybe list all the types of where consumers can get advice and why each should be used in different circumstances? How do each operate differently to the others. For example:

A Mortgage Broker?
Tied in Broker?
An IFA (Independent Financial Advisor)?
Whole of Market?
Specialists Advisors?

I am sure there are many more. Can some provide a definitive list etc and summary of when one should be used as oppose to the other? Who has offices/shops mainly and who does not. It just seems very confusing out there. A short list and a synopisis next to each would I am sure provide consumers with better information.

Thanks

payless

To try and put is in simple terms

The regulators of the UK finanancial services industry , have a system whereby "advisers" appy for regulation in a number of possible "areas of financial advice"

Basically these are

1. Mortgages

2 Insurance -

a General suchas Home/ car/ credit Insurance

b Protection - life, critical or long term income protection

3. Investments


Advisers apply for authorisation for 1 or more of these.

IFAs generally have No 3 at least

Within each section , an adviser could offer "whole of market" or panel or single provider ( the latter maybe as a tied agent)

Within each section an adviser may offer different payment structures ( fees or commission or both) An independent ( for mortgages and investments) needs to offer Whole of market and at least an option whereby they charge fees ( giving up commission) - although that needs only to be an option , they might still end up doing most work on commission basis

Some firms will be directly regulated by the FSA, others may use a "host" and therefore are actually exempt , as its the host that is authorised - this "host" may be a provider themselves , or more commonly a "network"


see http://www.fsa.gov.uk/consumer/02_HOW/Advice/mn_financial_advice.html

homer_j_3

emmaHarris wrote:

Could someone explain the differences and maybe list all the types of where consumers can get advice and why each should be used in different circumstances? How do each operate differently to the others. For example:

A Mortgage Broker?
Tied in Broker?
An IFA (Independent Financial Advisor)?
Whole of Market?
Specialists Advisors?

I am sure there are many more. Can some provide a definitive list etc and summary of when one should be used as oppose to the other? Who has offices/shops mainly and who does not. It just seems very confusing out there. A short list and a synopisis next to each would I am sure provide consumers with better information.

Thanks

Not sure if this is the definitive list but here is how I would explain it..

A Mortgage Borker or Mortgage Adviser is the terminology used for a person who provides advice on mortgages. They may also provide advice on non-investment based insurances like ASU, Life and Critical Illness insurance.

As a mortgage adviser you have 3 options on the level of advice you can give.

The 1st one being a single lender/panel adviser. These are the likes of the advisers you will get in your high street banks and at places like TML/National Guarantee.

The 2nd type is a multi-panel mortgage adviser. These advisers operate from more than 1 lender and can provide advice on a number of different lenders. This will vary from adviser to adviser. This is what I am and I offer advice from 30 different companies and have access to over 4000 products.

The 3rd type is a Whole of Market Adviser. These advisers like Mortgage Mamma, Andrew, Herbie, stanmoresaver can source products from any lender in the UK that will accept business submitted from a broker.

There has been some debate on how all these levels of service should be described. Please note that I have only tried to explain the main differences above is not an exhaustive explanation to the differences etc.

An IFA normally specialises in the investment side of the business and will provide advice on investment based products such as Unit Trusts, Bonds, Isa's etc to pensions and protection. Some IFA's will have the ability to provide advice on mortgages but this is not the staple of thier business.

I am not sure what you mean by specialist advisers but you may be referring to those advisers that deal purely with sub-prime or right to buys etc. If so then these advises will fit normally into the single lender/panel adviser or multi panel lender broker. They will just have a selection of lenders that will help hit their target customer base.

Hope this helps. As I say, its not a detailed indepth explanation but one that should hopefully give you a clearer understanding.

emmaHarris_2

I think we are starting to see some differences in who is who etc.

Maybe using Mortgage Terminology what is the list of titles these companies/people can go under?

Also, Borrowers can be charged fees and commissions or both maybe, so should potential advice seekers/borrowers search first for (a) which title is best suited for their needs (b) consider local or national (c) consider differentials in fees/commissions payable even before making their enquiries or putting their case forward?

What would you advise an enquirer to ask first?

payless

titles mean nothing, especially as they are sometimes misused

The proof of advice / services offerred should be in the Initial disclosure document

homer_j_3

Emma,

Have a read of this

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816,

I guess this should give you an insight. Although not everybody agrees that it is fully correct, I believe that it will help you get your head around it all a little better

emmaHarris_2

Thank you Homer, I will take a look.

dunstonh

Some stats out today which highlight how depolarisation has failed.

Out of 6.6 million peope who took advice last year, 72% said they thought they saw an IFA. Another 10% thought they say a multi-tie adviser with just 13% saying they took tied advice. However, in reality, nearer twice as many people end up taking advice from a bank or building society tied adviser as see an IFA.

Of those responding to research, 95% sent it was important that the adviser could recommend from the whole of market. Yet the majority ended up taking advice from a tied adviser with most thinking that tied adviser was independent.

That really just highlights how confusing depolarisation is. Especially with the three levels within the advice regimes.

homer_j_3

you nearly gave me a shock - I thought Ms Harris had returned. The figures do not suprise me at all....

Ian_W

you nearly gave me a shock - I thought Ms Harris had returned.

Ditto. Nearly spilt me cocoa. Please don't do that again dunstonh!!

dunstonh

Sorry. I only spotted the OP after I posted. Still, nice to keep you on your toes