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National advice firms accused of burying restricted status

by Michelle Abrego on Jan 03, 2013 at 12:11

National advice firms accused of burying restricted status

National advice firms, including Towry and St. James’s Place, are not clear enough about the fact they offer restricted advice, according to IFA comparison site VouchedFor.co.uk.

VouchedFor.co.uk a site that lets consumers rate and review IFAs, found that only two out of eight of the largest financial advice firms in the UK which provide restricted advice, were explicit about their status on their websites.

The review examined the10 largest financial advice websites, eight of which now provide restricted advice.

VouchedFor.co.uk said that Towry, headed by chief executive Andrew Fisher (pictured) had ‘simply dropped’ the word independent from its website without adding the term restricted.

Towry's fees page has changed from stating ‘we charge fair and transparent fees for our independent financial advice’ to ‘we charge clear and transparent fees for our services’.

Similarly, St. James's Place, who did not claim to be independent pre-retail distribution review (RDR), has not added the word restricted to its website.

Close Brothers Asset Management and Skipton Financial Services have sections within their websites that mention they offer restricted advice. Close Brothers mentions it is a restricted firm on a page about the RDR and Skipton mentions it in a site-wide footer message.

AWD Chase de Vere and Hargreaves Lansdown were the only two of the larger firms to continue to offer independent advice.

Adam Price, founder of VouchedFor.co.uk, said: ‘We fear this lack of transparency combined with large firms’ marketing budgets may draw consumers unknowingly toward restricted advice.’

‘While it is possible restricted-advice firms could offer the client lower charges, by not incurring the cost of reviewing all investment options, our experience suggests this is often not the case. Moreover, some restricted-advice firms appear to be recommending their own in-house funds over better alternatives.’

‘Ultimately, the difficulty for consumers in comparing restricted-advice firms is that they have to determine how competitive that firm’s preferred investment funds are. That may defeat the purpose of seeking advice.’

15 comments so far. Why not have your say?

Keith Cobby

Jan 03, 2013 at 12:26

So what. They may promote their own funds. If people don't like it there are plenty of other places to go.

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Marc (SE)

Jan 03, 2013 at 13:06

Keith, you miss the point - a client may not realise if disclosure is not explicit.

So SJP will use smoke and expensively designed mirrors to continue to inveigle clients into using their overpriced products/funds which benefit nobody more than SJP.

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Scott Gallacher

Jan 03, 2013 at 13:06

Keith Cobby you seem to miss the whole point of the article.

It is not 'restricted' advice necessarily that is the issue, just that clients are not told at the very start that the firm is 'restricted' rather than independent. Hence clients that want an independent adviser might waste several hours speaking to restricted firms before they find out their status.

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Jonathan Kirby

Jan 03, 2013 at 13:23

And you can bet that these companies have looked at what the FSA require of them and are complying.

What a farce.

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BillyBlackstock

Jan 03, 2013 at 13:26

Post RDR what has really changed?

Some will continue to sell products (own or otherwise) and some will charge for advice and planning.

Some will declare their status openly and honestly and others will not.

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Keith Cobby

Jan 03, 2013 at 13:27

The FSA have allowed this situation to remain whereby the provision of financial advice is not demarcated from that of a sales adviser. I cannot see that SJP 'adviser charging' is much different from their previous commission tariff.

I suspect very few people will really understand the difference between independent and restricted. If SJP provide unlawfull/misleading statements I am sure this will be brought to the attention of the FSA.

My point is that if their clients do not like the service or the charges they will move to something more suitable.

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PAUL WOOLLEY

Jan 03, 2013 at 13:44

Well this is not the intended outcome and not in the interests of the consumer.

So RDR has not worked, that is the point.

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Peter Parker

Jan 03, 2013 at 14:12

Why is anyone surprised about the above? To most, if not all intelligent practitioners this was always going to be the case.....

SJP are, and always will be a commission based, tied sales force that can only sell their own vehicles with the exception of mortgages and protection.

They will always charge the earth for "average" service, hide their commissions on the small print and largely use a "slick" marketing machine to entice people.

Their results would indicate this is a successful approach and at some point people have to take responsibiltiy for their decisions, and if members of the public are daft enough to use such an organisation, then so be it !

Concentrate on your own business, build it on ethics, morals, a fee basis that is profitable and fair and do your best for clients, and I am sure all IFA's will find they run a happy, successful and compliant business !

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MR C.

Jan 03, 2013 at 14:16

But, Keith, what those clients "like" and what is "suitable" may be two entirely different things.

But they'll only realise this when it's too late - I've witnessed this all too often and especially with clients coming to me with policies sold to them by a nice suit at SJP brandishing quality-feeling literature and driving a nice car.

Just goes to show that you shouldn't judge a book by its cover. But of you do then you've only yourself to blame.

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Dazlin43

Jan 03, 2013 at 14:18

Why is anyone surprised by this. SJP always tried to pass themselves off as IFA's before RDR.

They haven't changed what they charge the customers so why should they change how they market themselves unless the FSA forces them too.

I agree with other comments though we are not likely to change it so get on with your own business and if you are any good when you do come up against an SJP adviser you should always win. Heck I used to be a bank 'IFA' and I only ever lost out once to SJP and frankly they were welcome to that client.

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GNewman

Jan 03, 2013 at 14:26

FSA have additional requirements for Restricted firms, in addition to written confirmation:

Additional oral disclosure for firms providing restricted advice

COBS 6.2A.9 31/12/2012If a firm provides restricted advice and engages in spoken interaction with the retail client, a firm must disclose orally in good time before the provision of its services in respect of a personal recommendation that it provides restricted advice and the nature of that restriction.COBS 6.2A.10 31/12/2012Examples of statements which would comply with COBS 6.2A.9 R include:

(1) "I am a [Firm X] adviser offering restricted advice, which means that my advice is restricted to advice on [Firm X] [products/stakeholder products] only" or

(2) "I am a [Firm X] adviser offering restricted advice, which means that my advice is restricted to advice on [products/stakeholder products] from a limited number of companies that [Firm X] has selected".

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Peter Kay

Jan 03, 2013 at 14:40

Towry (Mr Fisher in particular) have a history of burying things. When they presented to Edward Jones advisers back in 2009 Andrew Fisher said "Nothing will change"."We don't work on salary validations", "our Funds are top-quartile performing" "we look after clients better"

300 branch closures later, hundreds of portfolios churned into their "Independent" DIMs, dozens of the "chosen" few who stayed with Towry "managed out2 because they were not meeting validation targets, Towry Fund performance - average at best (if you can obtain the data!), and Towry receiving the most Ombdudsman compliants in 2010- real customer service!- Of course nothing changed!!

But Towry and SJP have friends in high places, they all went to the same public schools as the good old chaps from the FSA- Things will never change until the FSA or FCA - grow a pair, and stop recruiting from the old school-tie network..

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Jonathan Kirby

Jan 03, 2013 at 15:19

@ G Newman

Thanks for digging that out.

And where is the proof of an oral declaration?

Are they going to record every meeting?

No - it's totally worthless.

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j p

Jan 04, 2013 at 15:49

the fundamental issue is that the criticism of the pre-RDR system was product bias, albeit the FSA's own research failed to show this, and now post-RDR the restricted route will result in product bias of an even riskier kind namely "tied".

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Wizdon

Jan 04, 2013 at 22:10

Look, SJP is a strong profitable co. clients may actually value that, especially in current environment when many IFAs are just about hanging on. Yes, there are people out there who fly first class and pay many times over the cheap seats, for getting from A to B - why? They pay for the total experience - a brand they feel comfortable dealing with. And no I'm not with them, and don't see them as a competitor - they have their market, and I have mine. Focus on your own 'sweet spot'

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