Join today

Independent Financial Adviser vs Tied Agent

Author: Longhurst
Published On: 6 April 2023

A theoretical scenario for you to ponder on

Imagine if you will your local supermarket, filled with all of life’s day-to-day essential items, neatly presented to you down 8 shopping aisles.

Which supermarket approach would you prefer?

(1) One where you are free to walk down each of the 8 individual aisles, exploring the entire universe of produce and products, then being free to purchase whichever you wanted?

(2) Or, would you instead choose to shop at the supermarket where they restrict your viewing to only 3 aisles, where you can only see a limited selection of items, including their expensive in-house range?

I’m sure, like me, you’d probably decide to shop at supermarket number 1.

Because, why would you intentionally shop somewhere like supermarket number 2?

Independent versus Tied Agents

The main difference between an Independent Financial Adviser (IFA) and a Tied Agent is the level of product and investment choice they can offer to their clients.

A firm which is Independent is not tied to any specific financial institution or product provider and can offer a wide range of products and services from various providers.

They can recommend the most appropriate products for the client’s needs, based on a comprehensive and unbiased assessment of the market.

On the other hand, a Tied Agent (similar to a salesman) is associated with a specific financial institution, such as a bank, insurance company, or other financial services provider.

They can only offer and recommend products from that institution.

This means that their product choices are limited and may not be as comprehensive as those offered by someone Independent.

Therefore, by working with a Tied Agent, if they can’t see or access the whole universe of solutions, how on earth can you have the confidence to know they’re being unbiased and fiduciary in their advice to you?

Fees and commissions

Additionally, a lot of Independent firms now charge flat-fees for their initial and ongoing advice, disconnecting the amount of wealth you have (to invest or not) from the advice you receive.

Tied Agents are less likely to be able to offer a flat-fee service, instead only charging % fees, most of which are reported to be well in excess of 2%+ year covering advice, their in-house fund range, and custodian costs.

It is therefore critically important to understand the compensation structure of the adviser and to be clear about the fees and commissions involved before engaging with them.

Check their credentials

It’s important to note that both types of advisers should be authorised and regulated by the Financial Conduct Authority (FCA) in the UK.

Always check the credentials of the adviser and the institution they are associated with before engaging with any financial advice services.

It’s also important to be aware of the potential for conflicts of interest when working with a Tied Agent.

Will they only get paid if you invest money with them?

If so, can their advice really be unbiased?

What if the best advice was to spend your money?

Or to buy property?

Would they still advise you to do that if they’re not going to get paid?

Next steps

It’s an ongoing and fairly public debate in our profession.

Independent versus Tied.

8 supermarket aisles versus 3.

Unbiased versus potential conflict.

Trust versus uncertainty.

At Longhurst, as a fully Independent firm we clearly believe in the former.

As such, our clients can rest assured that they’ve got access to the whole supermarket.

Because, if Longhurst can’t see all of the aisles, how on earth would we know if we were providing accurate and fiduciary advice.

If you have any questions about any of the above, or wish to discuss your financial plan with us, please get in touch

Chris Broome FPFS
Chartered Financial Planner
(01327) 223243

Creative and Media
Food & Beverage
IT/Web Services
Public Sector
Support Services

More news from Longhurst

Mount Everest Challenge - Longhurst
The only way is up! My Mount Everest Challenge

Author: Longhurst

Date: 14 March 2024

You’re a long time dead – said a very good friend of mine recently. They’re right of course. So, I started my 2024 by booking a two week “stroll” up to Mount Everest base camp! With a we must practice what we preach hat on, I’ve just signed up for this life changing experience. And … Continued
Read More
2023 – End of Year Letter

Author: Longhurst

Date: 7 December 2023

Greetings from Longhurst HQ! As is now a Longhurst custom, I wanted to take the opportunity to provide you all with a closing 2023 summary on our business, some of our highlights, and our thoughts as we enter 2024. GIVING BACK & PROJECT LONGHURST At Longhurst we are deeply passionate about supporting both our local … Continued
Read More
Double winner! Money Marketing Awards 2023

Author: Longhurst

Date: 29 September 2023

We couldn’t be prouder to announce that Longhurst won (1) Small Firm of the Year, and (2) Next Generation Firm of the Year Awards at last week’s Money Marketing 2023 awards. And, our recently launched ‘Project Longhurst’ good-giving programme also received a Highly Commended mention in the Charity Champion of the Year category. The Money Marketing Awards are the professions premier … Continued
Read More