Whole of market financial advisors

reheat

I have been told that Origen pension advisers, though not allowed to call themselves independent financial advisers since the law changed last December, are not restricted financial advisers. I am told that instead they are "whole of market" advisers. The distinction being that although they specialize in (and are therefore confined to) pensions, they look at the whole pensions market and are not restricted to particular pension companies.

Is this correct?

jem16

reheat wrote: »

I have been told that Origen pension advisers, though not allowed to call themselves independent financial advisers since the law changed last December, are not restricted financial advisers. I am told that instead they are "whole of market" advisers. The distinction being that although they specialize in (and are therefore confined to) pensions, they look at the whole pensions market and are not restricted to particular pension companies.

Is this correct?

They are Restricted Financial Advisers. That is the correct term. It is fine for them to explain that they offer "whole of market" advice on pensions but not entirely honest to say they are not Restricted. They should be saying that they are Restricted Financial Advisers who offer whole of market advice on pensions.

http://www.fsa.gov.uk/consumerinformation/product_news/saving_investments/changes-financial-advice/how-changing/independent-restricted

and;

http://www.unbiased.co.uk/financial-advisers-on-unbiased-co-uk

reheat

jem16 wrote: »

They are Restricted Financial Advisers. That is the correct term. It is fine for them to explain that they offer "whole of market" advice on pensions but not entirely honest to say they are not Restricted. They should be saying that they are Restricted Financial Advisers who offer whole of market advice on pensions.

http://www.fsa.gov.uk/consumerinformation/product_news/saving_investments/changes-financial-advice/how-changing/independent-restricted

and;

http://www.unbiased.co.uk/financial-advisers-on-unbiased-co-uk

Many thanks. I must say I find the FSA definitions very misleading. The FSA statement:-

Restricted advisers can also choose to focus on a particular market. This might be something like pensions, meaning the adviser will be able to recommend products from all providers that operate in this market.

The FSA seems to be using the term 'Restricted' for two different meanings:-

1. Restricted to products/companies because of financial/business tie-ins to those products/companies.
2. Restricted to only part of the market due to specialization in certain areas, such as pensions, mortgages etc.

The two issues are totally different surely? To call them the same thing is really confusing. Surely the FSA definition above would be better described as an Independent Specialized Financial Adviser?

The sort of adviser I need is a pensions specialist, but must be properly independent within that specialized area. And I was hoping the FSA would help me make a good decision - but they seem a bit confused about it themselves.

jem16

reheat wrote: »

The two issues are totally different surely? To call them the same thing is really confusing. Surely the FSA definition above would be better described as an Independent Specialized Financial Adviser?

The FSA has decided to "simplify" the adviser status.

The sort of adviser I need is a pensions specialist, but must be properly independent within that specialized area. And I was hoping the FSA would help me make a good decision - but they seem a bit confused about it themselves.

Most IFAs would be able to deal with pensions. What specialism are you looking for?

reheat

jem16 wrote: »

The FSA has decided to "simplify" the adviser status.

Always a good plan when it makes things simpler. Absolute rubbish when it confuses and complicates because it's not been thought through properly.

jem16 wrote: »

Most IFAs would be able to deal with pensions. What specialism are you looking for?

Being able to access cash free lump sum 5 years before retirement, without the risks of draw down options.

An alternative solution for me would be to have an interest-only mortgage, paid off at retirement out of my lump sum. So on reflection (as I write this) only a truly independent FA could do the holistic analysis needed to help me decide on the best option.

jamesd

If it's a defined contribution or other personal pension you can take the lump sum from age 55. For the rest you can just leave it invested if you don't want it. Invested can even mean cash savings accounts if you really want to avoid investment risk.

If you're actually investing the money, an interest only mortgage is likely to be the better option because you'll probably gain more from investing than the mortgage cost. But there's a big catch if you plan to buy an annuity in five years, because you should be looking to reduce the investment risk around now. Similar catch if you'd just use savings accounts within the pension.

So the key question comes down to how you'll invest the money within the pension.

dunstonh

The idea was a good one to simplify it. However, the implementation was not great.

The bottom line is that you are either independent or restricted. Whole of market was a term that described a commission based adviser (no fee option) that accessed the whole market. That term was abolished with RDR.

The distinction being that although they specialize in (and are therefore confined to) pensions, they look at the whole pensions market and are not restricted to particular pension companies.

Problem is that their website says something different. It says they do investments. So, they are doing other areas. So, what exactly are they restricting their service by?

sandsy

It's my understanding that a firm can't be restricted just in the area of pensions because other investments may be relevant to retirement planning. See this article:

http://www.ftadviser.com/2013/02/28/regulation/rdr/fsa-ifas-can-specialise-in-annuities-but-not-pensions-IcyNlcjYQ7pspzXHk7YUEL/article.html

atush

The two issues are totally different surely? To call them the same thing is really confusing. Surely the FSA definition above would be better described as an Independent Specialized Financial Adviser?

I agree with this. But surely, you didn't expect the FSA to make things easy on customers?

reheat

sandsy wrote: »

It's my understanding that a firm can't be restricted just in the area of pensions because other investments may be relevant to retirement planning. See this article:

http://www.ftadviser.com/2013/02/28/regulation/rdr/fsa-ifas-can-specialise-in-annuities-but-not-pensions-IcyNlcjYQ7pspzXHk7YUEL/article.html

I can see the sense of this, because in my case one of my options might be an interest-only mortgage.

mania112

Been a while but aren't a firm who, for example, don't want to get involved with UCIS known as restricted.

With that distinction, they could still sell Pensions - with just a limited number of investments to choose from (and they wouldn't want to recommend something unregulated anyway).

Restricted advice
A ‘restricted’ adviser can only recommend certain products, product providers, or both. This means they might only offer products from one company, or just one type of product.

An adviser offers restricted advice where they work with or for a product provider and only offer advice on the products that company offers.

Restricted advisers can also choose to focus on a particular market. This might be something like pensions, meaning the adviser will be able to recommend products from all providers that operate in this market.

Restricted firms are not allowed to use ‘independent’ to describe the advice they offer.

It should be made clear to you if you are receiving restricted advice and what that means in practice.