The words “independent” and “restricted” have been used for years to distinguish different types of financial advisers. But today, these terms are losing some of their meaning. The reason? Almost all financial advisers, whether they call themselves independent or restricted, are now relying on centralised investment propositions or outsourcing to third-party providers. This means that while advisers might offer slightly tweaked options, they’re generally working within the framework of a single provider—usually a badged platform.
The key difference comes down to control. Some advisers are locked into the investment choices made by their parent company, while others have a say in selecting the proposition. These more flexible advisers might opt for slightly better outcomes, such as lower fees or optimised returns for a given level of risk. However, even these so-called “independents” are working within the constraints of a single provider, and their ability to change the proposition is often limited to periodic reviews.
The Shrinking Role of Independence
As Ian McKenna, a well-respected figure in the financial advice industry, points out, the independent label is increasingly becoming a relic of the past. The financial advice landscape is undergoing significant consolidation, with more and more firms being acquired or merging with larger entities. As these mergers and acquisitions (M&As) continue, the number of truly independent advisers is shrinking, making the restricted ‘bigger player’ model more common in the advised market.
This shift is leading many to question the usefulness of the term “restricted” altogether. In a world where most advisers are tied to a specific provider or platform, the difference between independent and restricted is becoming increasingly blurred. This has significant implications for consumers, who might wonder if they’re really getting the broad, unbiased advice they expect from an “independent” adviser.
The Rise of the Direct Route
As the independent label shrinks and the restricted model becomes more prevalent, more consumers are exploring the direct route—choosing to manage their investments without an adviser. This trend is being driven by the availability of low-cost, well-diversified investment options that are easy to access and understand. Platforms like AJ Bell have reported that two out of three investors now come to them directly, bypassing advisers altogether.
For many investors, this direct approach offers better value for money. By cutting out the middleman, they can reduce costs and still access high-quality investment options that meet their needs. Christopher Woolard, former CEO of the Financial Conduct Authority (FCA), has emphasised in the forward for the Consumer Duty consultation paper that most retail investors are best served by these simple, cost-effective solutions. Unfortunately, many investors still overlook these options, potentially missing out on the benefits they offer.
What This Means for You
The bottom line is that the traditional distinctions between independent and restricted advisers are becoming less relevant. What matters most is whether the advice you receive is aligned with your financial goals and offers good value for money. Whether you choose to work with an adviser or go direct, the focus should be on transparency, simplicity, and cost-effectiveness.
As the financial advice industry continues to evolve, it’s important to stay informed and consider all your options. The rise of the direct route is just one example of how consumers can take control of their financial futures, potentially achieving better outcomes at a lower cost.
Moving Forward with Confidence
As you navigate this changing landscape, remember that the best financial decisions are based on clear, accessible information and advice that is tailored to your unique needs. Whether you choose to work with an adviser—independent, restricted, or otherwise—or manage your investments directly, the goal is the same: achieving your financial objectives with confidence and peace of mind.
In this evolving market, don’t get caught up in labels. Instead, focus on finding the right solutions for you, and make informed choices that will help you secure a bright financial future.
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