Danielle Levy today published an interesting piece on the Citywire Wealth Manager website about the use of the ‘restricted advice’ label that may be imposed on wealth managers by the FSA’s retail distribution review (RDR).

Within it she highlighted that wealth management firms that do not currently advise on life products and pensions are left with a dilemma. Should they take on the ‘restricted advice’ label, which the FSA has now said will be accompanied by a short description of why the firm offers restricted advice, or expand their coverage of products to comply?

Stuart Fowler, one of the experts quoted, argued that the label lost its meaning when the FSA decided to move away from the previous distinction between the two advice models of ‘independent’ and ‘tied’.

‘Restricted is a newly made-up category and so has no meaning with customers to lose. And when it comes to investment credibility, I doubt this new label can ever have the power to damage the image of wealth managers relative to IFAs.

‘Independence, on the other hand, which does mean something economically and does imply something really useful about the best interests of consumers, has just been rendered impotent. That, in my opinion, is a regrettable loss,’ Fowler said.

‘I understand why wealth managers are concerned and I was initially, but I think we are being too defensive. We are what we are and our credibility is as investment houses,’ he added.

TAGS: business models, press mentions, RDR