As this is the first blog post of 2013 (and the first one since December the 23rd) let me take the time firstly to say I hope you had a great Christmas break and wish you a happy and healthy new year.

Also since my last entry the rules governing financial advice have changed in a number of ways.  I was back in the office yesterday and one of the first calls I received was present to a number of business owners about how these changes might impact them.

There has been significant publicity around these changes so I’d assumed that many people were already aware of the changes.  However the fact that I was asked to explain the changes have made me aware of one thing.  My assumption was wrong.

Therefore I thought as my first blog post of 2013 there would be some value in confirming how these changes may impact you if you’re looking for professional financial advice….

1. Qualification

Firstly the minimum standards of qualification for a regulated financial adviser have increased.  There has been a lot of work over the past few years by many financial planners to develop their knowledge to ensure that they meet these minimum standards and it should mean that you are working in partnership with an individual who has a higher standard of technical expertise than previously expected.

This is a positive move for you (if you’re looking for advice) as it should mean that you are speaking to a professional who has taken the time, effort and energy to ensure they have the technical capacity to ensure you are looked after.

However there are different levels of qualification which are worth considering when deciding who to work with when seeking financial advice (including being chartered or certified) and I’ll talk about the different qualifications and standards in a later blog entry.

2.Paying for advice

Let’s be clear.  Investment Advice has never been free.  Previously ‘commission’ was paid from the product provider to the adviser.  This didn’t mean that you didn’t pay for the advice…it just meant that the charge for the advice you received more often than not was tied up within the charges of the product.

This has now changed and all financial advisers (when recommending investment planning or retirement planning products) should now ensure that they are crystal clear about the cost of advice as well as having an up front discussion detailing how you can pay for the advice you receive.

There are a range of ways to pay and doesn’t necessarily mean you will have to pay for the advice directly from your bank account (although it’s worth discussing with your adviser whether this might be an appropriate approach).

The key point here is that there is now far more clarity in how much this advice will cost you.  You can then make an informed decision about whether you feel the advice you will receive will be good value.

This is another positive move forward for you if you’re looking for investment related advice.  Now you know, as you would if you were working in partnership with a solicitor or an accountant, how much the professional advice you receive will cost.

3.  Independence vs Restricted

Under the new rules your adviser should be entirely clear about whether they provide independent or restricted advice.

Let’s be clear on the difference…

a “restricted adviser” can only recommend certain products from certain product provides.  In reality this might mean that they can only recommend products from one company…or alternatively just one type of product.  It could also mean that have a limited panel of providers and products to recommend from.

an “independent adviser” can consider all types of retail investment products from all firms and all across the whole of the market market.

Regardless of whether the adviser is “Restricted” or “Independent” they cannot be paid commission and should talk to you about how much the advice will cost.  However it’s important to understand whether your adviser has access to the whole of the market or only a proportion of it….and if it’s only a proportion how limited might they be?

This is another positive move for you if you’re looking for advice.  You should now be clearer on the advice you’re receiving and whether the whole of the market is being considered or is limited.

Hopefully this explanation has been useful and if you have any queries, comments or questions please let me know either via my email (Chris@Principalifas.co.uk) or via twitter (@ChrisDaems).  I look forward to hearing from you.