The financial services industry defines independence by the products an adviser can recommend. I believe genuine independence begins somewhere else.
By Steve Conley | Founder, Academy of Life Planning
What does it mean to be independent?
It sounds like a straightforward question.
If you employ an independent financial adviser, you might reasonably expect someone who is free to recommend whatever is best for you, without commercial pressures influencing their judgement.
That is certainly the impression the word creates.
But in financial services, independent has a particular regulatory meaning.
And I believe that meaning leaves an important question unanswered.
Independent of the product provider, perhaps. But independent of the need to place your assets?
Those are two very different things.
How independent financial advice began
The distinction between independent and tied financial advisers emerged from the regulatory reforms of the 1980s.
Under the system known as polarisation, introduced in 1988 following the Financial Services Act 1986, advisers were broadly divided into two camps.
A tied adviser represented a particular financial product provider.
An independent financial adviser could recommend products from across the market.
The distinction was intended to help consumers understand whose interests their adviser represented.
In principle, that was a valuable development.
Instead of being confined to the products of one insurance company or investment provider, an independent adviser could search the market for a suitable solution.
But the distinction concerned who supplied the financial products, not necessarily whether financial products needed to be supplied at all.
That difference matters.
The rules evolved.
Polarisation was dismantled during 2004–05, allowing more forms of distribution. Then the Retail Distribution Review, implemented in 2013, introduced clearer distinctions between independent and restricted investment advice.
The reforms also largely removed commission payments from providers for new advised retail investment business, replacing them with disclosed adviser charges.
These were important consumer protections.
But the underlying business model remained substantially focused on distributing and servicing financial products.
The products changed. The remuneration arrangements changed.
The gravitational pull of assets remained.
What does independent mean today?
Under Financial Conduct Authority rules, independent investment advice must be unbiased and unrestricted, based on a sufficiently broad and fair assessment of relevant products.
Restricted advice does not meet that independence standard.
The distinction is meaningful.
An independent adviser has broader market obligations. A restricted adviser must explain the limits of the service.
And I would never suggest that independent advisers are necessarily acting improperly.
Many are highly competent, conscientious professionals who work hard for their clients.
But there is a fundamental distinction between regulatory independence and economic independence.
One describes the range of recommendations available.
The other concerns what the business needs to happen to earn its money.
And that is where things become interesting.
The independent adviser with a house investment proposition
Over the past decade, financial advice firms have increasingly adopted centralised investment propositions, commonly known as CIPs.
A CIP typically provides a standardised investment approach for clients, often using selected platforms, funds, model portfolios or discretionary investment managers.
There are sensible reasons for doing this.
Centralisation can improve consistency, support investment governance, reduce administration and help firms manage regulatory responsibilities.
Not every client needs an entirely bespoke investment portfolio.
But centralisation can create another problem.
What happens when the firm’s preferred investment solution becomes the expected destination for the client’s money?
Industry research published by Copia Capital suggests that 92% of advice firms use centralised investment propositions.
Its 2026 research also indicates that outsourced managed portfolio solutions have become increasingly prominent.
This raises an uncomfortable question.
If an adviser is technically independent because they can consider the whole market, but their firm strongly encourages the use of a particular platform, portfolio range or investment proposition, how independent is the practical outcome?
Consider two advisers.
One works for a restricted firm with a clearly defined investment range.
The other works for an independent firm with access to the whole market, but whose clients overwhelmingly end up in its preferred investment proposition.
The advisers have different regulatory statuses.
But from the customer’s perspective, the practical experience might be surprisingly similar.
Of course, similar recommendations do not prove bias. A well-researched CIP might genuinely be appropriate for many clients.
The real test is what happens when it is not.
Can the adviser recommend something else?
Can the client retain their existing investments?
Will the firm support that decision without imposing unreasonable charges or making the relationship commercially unattractive?
Does the adviser face internal pressure to use the house proposition?
These are the questions that reveal practical independence.
The FCA has recognised these risks.
Its guidance warns firms against forcing clients into a CIP when it does not suit their individual circumstances.
It has also identified examples of conflicts where employees benefited from the success of a CIP, or where the organisation assessing suitability had a financial interest in the recommended solution.
The regulatory warning is clear.
A centralised proposition must serve the client.
The client must not become a means of serving the proposition.
The deeper problem: asset-placement bias
There is another form of bias that receives less attention.
I call it asset-placement bias.
Imagine a client approaching a financial adviser with £500,000 in investments.
The client wants to know whether they can afford to retire.
There are several possible answers.
They might need a cash-flow plan.
They might need help understanding their pensions.
They might need to reduce expenditure, restructure debts, work part-time or reconsider when they retire.
They might need to change absolutely nothing about their investments.
But consider what happens when the adviser’s business model earns ongoing revenue based on the assets it advises upon or manages.
At an adviser charge of 1% annually, £500,000 represents £5,000 in annual revenue.
If the client retains their existing arrangements outside the adviser’s charging structure, the potential recurring revenue may be considerably lower.
That creates an economic incentive.
Not necessarily a conscious bias.
Not necessarily misconduct.
But an incentive nonetheless.
We should distinguish three questions:
- What does the client need?
- What solution is suitable?
- What outcome generates revenue for the adviser?
Ideally, the answers align.
But what happens when they do not?
What happens when the best advice is to retain an existing pension?
Or to spend some money rather than invest it?
Or to repay debt?
Or to help a family member?
Or simply to do nothing?
Can the business earn a fair living by telling the client that no assets need to move?
That is the test I am interested in.
The Retail Distribution Review did not remove every incentive
The Retail Distribution Review was an important reform.
Removing provider-funded commission from new advised retail investment sales reduced a significant source of product-provider bias.
But it did not eliminate commercial incentives from financial advice.
Under FCA rules, advisers can charge hourly rates, fixed fees, percentages of investment value or combinations of these.
A percentage-based fee is not automatically inappropriate.
Neither is an ongoing advisory relationship.
Clients can receive considerable value from ongoing support, particularly when their circumstances are complex.
But we must recognise that the method of remuneration affects the economics of the business.
When revenue grows with assets under advice, acquiring and retaining assets becomes commercially attractive.
An adviser might be independent of any particular investment provider while remaining economically dependent on maintaining a pool of chargeable assets.
That dependency can influence:
- Which prospective clients are commercially attractive.
- Which services the firm prioritises.
- How advice propositions are designed.
- Whether existing investments are retained or replaced.
- Whether clients are encouraged to pay for continuing services.
- Whether people without substantial investable assets can access support.
These are structural questions, not accusations against individual advisers.
Indeed, the FCA has recognised that remuneration conflicts can contribute to poor outcomes.
Its evaluation of contingent charging in defined-benefit pension transfers identified how payment dependent on a transaction proceeding could encourage unsuitable recommendations.
That is a particularly stark example, and not the same as ordinary percentage-based ongoing fees.
But it demonstrates an important principle.
Incentives matter, even when the people involved believe they are acting professionally.
How different are independent and restricted advisers in practice?
According to the FCA’s 2025 retail intermediary market data, 88.1% of firms providing retail investment advice offered exclusively independent advice.
Another 10.6% offered exclusively restricted advice, while 1.3% offered both.
These figures describe firms, not their share of clients or assets.
They tell us something about how firms are classified.
They tell us much less about how different their recommendations are in practice.
And that is an important evidence gap.
We cannot conclude that independent and restricted advisers produce identical outcomes.
Nor should we assume that a restricted adviser necessarily gives poorer advice.
An independent firm may deliver excellent, genuinely wide-ranging recommendations.
A restricted firm may provide a suitable, transparent and competitively priced service within its stated limitations.
The difference that matters to the consumer is ultimately the quality, suitability, cost and independence of the decision-making.
A regulatory label is one indicator.
It is not the whole story.
And I would argue that the consumer deserves to understand both the limitations of the recommendation and the commercial incentives behind it.
My definition: independent of assets
When I use the expression Independent Financial Planning, I mean something different.
I mean financial planning that does not depend on selling, arranging, transferring or managing the client’s investments.
At the Academy of Life Planning, we start with the person.
Their life.
Their circumstances.
Their responsibilities.
Their relationships.
Their ambitions.
Their fears.
Their opportunities.
Money matters enormously.
But money is one resource among several that people use to build the lives they want.
We describe Total Wealth as financial capital plus human capital, less liabilities.
A person’s knowledge, skills, health, relationships, purpose and capacity to act are all relevant to their financial future.
A good plan should consider these things together.
That is why our starting point is different.
Bring me the problem, not the portfolio.
You might want to know whether you can retire.
Whether you should change careers.
Whether your pension arrangements are suitable.
Whether the advice you have received makes sense.
Whether you can afford to help your children.
Whether you have enough.
These are planning questions.
They do not automatically require investment transactions.
And the planner’s remuneration should not depend on discovering one.
Separating planning from product distribution
Our approach is built around a deliberate separation.
We help people understand their circumstances, explore their options and develop their own plans.
We use education, AI-supported tools, structured planning processes and human expertise.
Clients pay for planning and support.
They retain control of their investments.
We do not manage portfolios, distribute investment products or receive product commissions.
Where someone needs regulated investment advice or a financial product, they can seek that separately from an appropriately authorised professional.
The planning relationship does not require us to become an intermediary in the transaction.
This does not make our work a substitute for regulated investment advice.
It makes it a different service, serving a different purpose.
And it changes the commercial relationship.
We can help a client decide that their existing arrangements are satisfactory.
We can help someone who has little investable wealth but faces important life decisions.
We can help a person interrogate an adviser’s recommendation without needing to replace that adviser.
We can support a client who wants to remain self-directed.
The value lies in the quality of the planning, not in the quantity of assets placed.
That is what I mean by independent.
Independence should be tested by what happens when nothing moves
There is a simple test that I believe every consumer could apply.
Imagine that you approach a financial professional with an important problem.
After examining your circumstances, the best conclusion is that you should leave your existing investments exactly where they are.
No transfer.
No new platform.
No new managed portfolio.
No additional assets under advice.
What happens next?
Does the professional still have a viable service to offer?
Can they charge transparently for the thinking, analysis and support they provide?
Can you maintain the relationship without surrendering control of your portfolio?
Or does the commercial proposition begin to unravel?
This is not a test of whether an individual adviser is honest.
It is a test of whether the business model is aligned with the client’s freedom to choose.
From independence of provider to independence of assets
The financial advice industry has spent decades refining the distinction between independent and restricted product recommendations.
That distinction still has value.
But I believe we now need a further distinction.
Independence of product provider asks:
Can the adviser choose from across the market?
Independence of assets asks:
Can the planner help me achieve my objectives without needing to control, move or monetise my investments?
The first is about product choice.
The second is about human agency.
As AI makes financial information, modelling and analysis more accessible, consumers will increasingly be able to interrogate the economics of the advice they receive.
They will ask what they are paying for.
What alternatives exist.
Whether they actually need to move their money.
And whether their planner’s interests align with their own.
I welcome those questions.
Because the purpose of financial planning should never have been to gather the largest possible pool of client assets.
It should be to help people make better decisions about their lives.
Independent Financial Planning means being free to recommend a better life without needing to recommend a different investment.
That is the independence I believe consumers deserve.
And it is the independence we are building at the Academy of Life Planning.
Bring me the problem, not the portfolio.
Steve Conley is a Chartered Financial Planner and founder of the Academy of Life Planning. The Academy provides independent life and financial planning, education and decision support without distributing financial products or managing investments. It does not provide FCA-regulated investment advice.
Research and further reading
- House of Commons Library — Polarisation — The origins and evolution of the independent financial adviser distinction.
- FCA — Describing advice services — The regulatory distinction between independent and restricted investment advice.
- FCA — Retail intermediary market data 2025 — Evidence on the proportion of firms offering independent and restricted advice.
- FCA — Assessing suitability — Regulatory expectations for centralised investment propositions and replacement business.
- FCA — Finalised Guidance FG12/16 — Examples of conflicts of interest involving CIPs.
- Copia Capital — CIP research — Industry research into the prevalence and operation of CIPs.
- FCA — Adviser charging rules — Permitted charging structures and transparency requirements.
- FCA — Ongoing financial advice services — Findings on ongoing fees and the delivery of ongoing services.
- FCA — Evaluation of the ban on contingent charging — Evidence of how remuneration incentives can affect advice outcomes.
