It gets harder and harder to know how to set out what advisers must do to deliver, and demonstrate, Independent advice without covering the same ground over and over again.
At ValidPath we believe is that it’s not about doctoral level analysis of the English language to determine what the regulator means.
We believe it’s about the client, and it’s about starting with the client. Perhaps it’s easier to say what Restricted advice involves, and then do the opposite!!
We are all clear that if we were a network with one investment proposition with three portfolio choices, and no other options, this would be Restricted advice. We know that if we were a network with a series of best advice lists with products and funds which could not be varied this would be restricted advice. We know that if we work for SJP and can only sell their pensions and bonds this is Restricted advice.
But change your perspective. To my mind one starting point is that we are professional advisers, and we have spent years acquiring knowledge and experience on the basis of which we advise our clients. We weigh up evidence and draw conclusions about funds, products, providers, strategies which form the basis of our advice : active or passive, pensions or ISAs, repay debt or invest, IHT gifts or whole life protection, lump sums or monthly savings. On the basis of those understandings, which we may record in an investment and advice philosophy document, we will advise our clients. That advice will therefore be consistent between clients, because our opinions on these core beliefs do not change with the weather.
Then we start from the client : if you know without any shadow of a doubt before they walk through the door what your suitability letter is going to say when they leave then I would challenge whether your advice is Independent. The infinite variability of client circumstances means that while there will be similarities between clients there WILL also be differences.
You might use platforms, but there are some clients who do not need platforms to implement their strategy. Many clients will need to make use of pension plans to achieve their objectives, but there may be some who would do better building their plans with ISA investments. Some will find a passive model portfolio perfectly suitable for their planning, but others will need an active bespoke strategy to deliver the results.
Clients are unique. Their “demands and needs” are unique. YOU are unique. Your business process may (ought to?) be consistent. Your advice may (ought to?) be consistent. But as long as consistent doesn’t mean constrained you’re Independent.
As we said yesterday, it’s our problem-free philosophy!!
On September 11th, 2014 ValidPath held our 'Evidencing Independence' event in Solihull
ValidPath Members can already find updated guidance on FactFinding, plus some related materials, used on the day, in the relevant section of our growing Best Practice library.