For many years now, the UK financial industry has been dominated by the mass of Independent Financial advisers. These are the people who show us where to put our money, when to cash it in and what to do with it. But are they really independent?
In essence there are really two types of adviser, those who charge you up front and those who take a commission from the investment provider whom you choose to invest with. After a number of complaints from certain areas of the investment industry, the Financial Services Authority are looking in to the relationship between the firms who advise, the investment companies who provide the financial products, and the commissions paid.
While changes to the industry over the last 10 years have ensured total transparency, some believe that there is an unhealthy relationship between many advisers and many investment providers, thereby threatening the true foundations of independent advice. Even though this situation has been covered many times before, there is a growing expectation that we may see some fundamental changes this time.
If the authorities where to outlaw commissions to advisers, or increase the need to reveal these payments, there are those who forecast that 90% of the independent advisers currently working in the industry, would encounter major troubles. This in turn would reduce the number of advisers for investors, thereby reducing their choice – a vicious circle.
Quite what will be done remains to be seen, but it looks as though something will need to change.