For Some Financial Advisers, ‘Restricted’ Is the Hardest Word to Say
A website spot-check of financial advice firms has revealed striking differences in how clearly businesses tell prospective clients whether the advice they provide is independent or restricted.
Independent financial adviser Rowley Turton carried out the exercise after director Scott Gallacher struggled to establish from another wealth management firm's website whether it offered independent or restricted financial advice.
That prompted a wider question: how easy is it for a prospective client to establish one of the fundamental characteristics of an advice service?
Rowley Turton initially reviewed a sample of 50 UK financial advice and wealth management websites, asking a simple question: could a prospective client readily establish from the firm's website whether its financial advice was independent or restricted?
The spot-check suggested independent firms were generally comfortable promoting their independent status.
Large restricted businesses were also often explicit about their position, with firms such as M&G, True Potential and Rathbones using the term “restricted” and explaining what it meant.
However, a further comparison produced a striking difference in how some smaller restricted advice businesses communicated their status.
Rowley Turton then examined a sample of 20 St James's Place Partner Practice websites where the restricted nature of the advice had been independently established.
While the websites contained regulatory wording explaining that the businesses represented only St James's Place for certain regulated activities and advised solely on the Group's relevant wealth management products and services, none of the 20 websites examined prominently described the service using the straightforward term “restricted financial advice”.
Rowley Turton then looked at a separate sample of 20 restricted advice businesses outside St James's Place.
The picture was markedly different.
A clear majority of the non-SJP restricted firms examined explicitly used the word “restricted” somewhere on their websites when describing the nature of their advice.
Scott Gallacher, director and independent financial adviser at Rowley Turton, said:
“Apparently, for some financial advisers, ‘restricted’ really is the hardest word to say.
“There is absolutely nothing inherently wrong with restricted financial advice. The FCA recognises both independent and restricted models, and there are excellent advisers operating under both.
“Indeed, some of the largest restricted advice businesses we looked at were amongst the clearest at telling consumers exactly what they offered.
“What interested me was the difference in language.
“Many independent firms simply say, ‘We are independent financial advisers.’ Many restricted firms are equally straightforward and say, ‘We provide restricted financial advice’, before explaining what that means.
“But on the St James's Place Partner Practice websites we examined, we repeatedly found much longer regulatory wording explaining the limitation without prominently using the simple word ‘restricted’.
“Someone working in financial services will understand what ‘represents only St James's Place’ and ‘advising solely on the Group's wealth management products and services’ means.
“My question is whether the average member of the public would understand that this means they are receiving restricted rather than independent financial advice.”
Questions for industry commentators
- Does your firm clearly state on its website whether the financial advice it provides is independent or restricted? If so, where and how is this explained?
- How well do you think consumers understand the difference between independent and restricted financial advice, and is terminology such as “represents only” or “advising solely on” sufficiently clear to an ordinary client?
- Should the FCA tighten its rules so that firms offering investment advice are required to state prominently on their public websites whether their advice is independent or restricted, using those specific terms?
- Why do you think some restricted firms openly use the word “restricted”, while the St James's Place Partner Practice websites in this spot-check generally communicated the limitation through alternative regulatory wording instead?
- Does the Consumer Duty's focus on consumer understanding mean firms should go beyond technically adequate disclosure and make their independent or restricted status immediately obvious to prospective clients?
- Is there a commercial reason why an advice business might be reluctant to prominently describe itself as “restricted”, and could consumers perceive the term negatively even where the firm believes its restricted proposition provides good outcomes?
Methodology
The exercise was a website spot-check rather than statistically representative market research. The firms reviewed were not selected using a formal statistical sampling methodology, and the exercise was intended to explore how advice status is communicated rather than measure the UK market as a whole.
The website review was conducted with the assistance of AI tools, with findings checked against firms' own websites and other publicly available sources.
Rowley Turton is not suggesting that any of the businesses examined have failed to comply with their regulatory disclosure obligations. Firms may provide fuller information about the nature of their advice during the formal client onboarding and advice process.
