Firms need to show evidence that that they are able to advise on all retail investment products (RIPs) that are capable of meeting the investment needs and objectives of their retail clients. As they need to be assessed on an individual client basis, many firms will be unable to say upfront what products may be capable of meeting the investment needs and objectives of their clients. So we will expect most firms providing independent advice to be able to provide advice on all types of RIPs.
Advisory firms typically use research to distil the product market (whether or not they formally construct a panel). If a firm does this, it should be able to show evidence of its selection criteria to select products and the product research it has undertaken, and how these are consistent with the independence requirements and the client’s best interests rule. If a firm excludes a certain type of RIP from its ‘panel’ because, after review, it decides that there is a valid reason consistent with the client’s best interests rule for doing so, it should be able to show evidence of this decision.
A firm that says it provides independent advice also needs to be able to advise off-panel if that would be in the best interests of a particular client. As stated in our previous guidance (FG12/15), to do this a firm’s advisers should maintain an awareness of what is and is not included in the panel.
This is so it can identify clients for whom an off-panel solution would be suitable. The firm will also need to show evidence of how it regularly reviews the decision to exclude certain product types from
A firm that holds itself out as independent should also genuinely be able to consider all RIPs of the
relevant market. We would question a firm that said it was independent and considered all products
but did not have a mechanism for actually advising on a particular product – investment trusts or
exchange traded funds (ETFs) for example.
We would also expect the firm’s disclosure documentation to be clear about the service the firm provides.