Let me be clear, restricted advice is not inherently bad or wrong.

Many excellent advisers and Financial Planners offer good quality restricted advice to clients. For many clients the quality of the advice is more important than whether the adviser is restricted on the range of financial products they can offer.

Even so, to my mind independent advice is best.

With this in mind I was cheered by a story we covered this week which reveals that 86% of financial advisers offer only independent rather than restricted financial advice, a figure much higher than I suspected.

According to data from the FCA’s Retail Mediation Activities Return (RMAR) report for 2022, just 12% of advice firms provide only restricted advice. A very small number, about 1%, offer both. The RMAR data is based on detailed returns to the FCA from regulated firms. Data is rounded up or down to meet a 100% total.

Given the choice most advisers and planners are offering independent financial advice and not using restricted panel. This has to be good for the client.

It would be easier, and possibly more profitable for advice firms to offer restricted advice but given the choice they have opted for independent status.

Of course, this doesn’t mean that independent advisers are perfect, far from it, but the requirement to research the whole market place for their clients means they have to work harder.

Surprisingly this does not seem to come at a much higher cost. In fact, according to the FCA’s RMAR data many restricted advisers actually charge more for their advice in terms of initial and ongoing advice percentages.

For those firms offering restricted advice, unless it can be delivered at a much lower cost than independent advice or with some other hidden benefit, they may wish to consider their model.

If there are really no or few major benefits to restricted advice why offer it at all?

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Kevin O'Donnell is editor of Financial Planning Today and has worked as a journalist and editor for over four decades.