Independent versus restricted advice: What's the difference?

We outline the differences between independent and restricted advisers and examine which is right for you.

Firstly, independent and restricted advisers essentially do the same thing - provide expert advice to individuals and businesses on how to reach their financial goals.

What's more, both are authorised and regulated by the Financial Conduct Authority to provide financial advice, and the minimum qualification criteria (Level 4 Diploma) applies to all financial advisers regardless of their status.

The similarities end, however, when it comes to their access to products and providers.

Let's look at a definition of each:

What is an independent financial adviser?

Independent advisers can recommend financial products spanning the whole of the market.

This means their advice is unrestricted.

What is a restricted financial adviser?

Restricted advisers can only recommend products from certain providers or may be restricted in the types of products they offer, or both.

Independent vs restricted: which one is right for me?

When you first meet with a financial adviser, they must tell you in writing whether the advice they offer is independent or restricted.

If the adviser is restricted, they must explain the nature of the restriction. For example, this could be that they can only advise on products from a handful of providers or only offer advice in certain areas, such as pensions.

In many cases, while restricted advisers or firms can cater for a broad range of financial planning needs, if you want access to the widest possible range of products and solutions, you may wish to consider independent advice in the first instance.

It’s important to note that whether an adviser is independent or restricted is only one part of the process when selecting a suitable adviser. There's lots more for you to weigh up.

We’ve got a handy guide here on everything you need to think about.

Learn more: Can I have more than one financial adviser?

Independent financial adviser advantages and disadvantages

Independent financial advisers (IFAs) can recommend products from the whole of the market, offering truly unrestricted advice tailored to your needs.

This broad access means you're more likely to find the most suitable solution, whether for pensions, investments, or insurance.

However, this wider scope may come with higher research demands and potentially more complex advice, which could result in longer decision-making processes.

Restricted financial adviser advantages and disadvantages

Restricted advisers typically work with a limited panel of providers or specialise in certain product types, which can make the advice process more streamlined and easier to follow.

This focused approach may suit clients with straightforward needs.

However, the downside is reduced choice, which could limit your access to the most competitive or appropriate products across the whole market.

How do the costs for independent and restricted advice differ?

You may assume that because an adviser has limitations on the products or providers they can recommend, the amount they charge will be less.

This is not the case. In fact, a previous Financial Advice Business Benchmarks report found that restricted firms tend to charge more on average than their independent counterparts.

Before engaging with an adviser’s services, it’s important to ask how they are paid and what the fees will be. And always be wary about making decisions based on cost alone.

Just because an adviser is cheaper, it doesn’t necessarily mean their services will offer the best value.

How can Unbiased help?

If, after reading this, you feel that financial advice is what you need, you're in the right place.

Whether your goal is to grow your wealth, generate sufficient income in retirement or review your pension, we can connect you with the right adviser.

We have both independent and restricted advisers on our platform, but our restricted advisers can go off-panel should you request them to.