Different types of financial advisers
All financial advisers must be authorised by the Financial Services Authority (FSA). If you are dealing with an adviser who is unauthorised, they are breaking the law and you will not benefit from the protection that authorisation gives consumers. In order to check to see whether or not an adviser is regulated, visit the FSA's central register at: www.fsa.gov.uk/register
Independent Financial Advisers
Independent Financial Advisers (IFAs) have no contractual ties to the product providers (such as life insurance companies) whose products they advise on.
IFAs act as the agents of their clients and their independence enables them to research products from across the whole market.
IFAs are the only advisers who must (under the regulator's rules) provide you with the option to pay for your advice entirely by fee, rather than taking any commission that the product provider will pay. As such, they give you with more flexibility when it comes to deciding how you want to pay for the advice you receive.
Whole of market advisers
Whole of market advisers share all the above characteristics of an IFA except they are not required by the FSA to provide clients with the option to pay for their services entirely by fee.
Whole of market advisers are not contractually tied to product providers and they can advise on products across the market (hence the term 'whole of market'). They operate on a commission basis.
Whole of market advisers act as the agents of their clients.
Multi-tied Advisers
Firms of multi-tied advisers, usually operating in high street banks or building societies, have contractual obligations to a limited range of product providers (e.g. life insurance companies) and can only advise on the products offered by those companies.
Single Tied Agents
Single tied advisers, usually operating in high street banks or building societies, have a contractual obligation to one product provider (e.g. a life insurance company) and can only advise on the products of that company.
Single tied advisers are the agents of the company to which they are tied, not the client’s agent.