Focused or limited advice?
One of the main areas of confusion that often results if queries to Compliance are the various terms used to describe the situation where an adviser is required or requested to provide advice in one area as oppose to “Full Holistic Financial Planning, so it is always a good idea to “revisit” these descriptions.
Advice focused, at the request of the customer, on the provision of personal recommendations relating to a specific need, designated investment, or certain assets.
A term also used to describe focused advice – but not to be confused with limited information - see below.
Advice that is limited to one or more of a customer’s specific needs and does not involve analysis of the customer’s circumstances that are not directly relevant to those needs. Tends now to be referred to as Focused.
It is not actually a defined term in the Handbook, but has been adopted to describe streamlined advice processes which aim to address straightforward needs of consumers. It is used to mean a limited form of advice, in that it is focused on one or more specific needs and does not involve analysis of the consumer’s circumstances that are not directly relevant to those needs.
Relates to situations where it is not necessary to provide ALL the usual presentation documentation to a retail client, as it is perhaps, contained within other documents already provided (ie rebalancing of fund mix without introducing new funds)
Generic information / Recommendation / Advice:
Generic advice is a broad term that covers advice or information that does not relate to a specific investment or does not otherwise meet one of the other characteristics of regulated advice, so is not a regulated activity. However, when generic advice is given with regulated advice (for example, a personal recommendation on a retail investment), the generic advice becomes part of the regulated advice. For example, generic financial planning advice that also involves advice on the merits of investing in a particular product with a particular provider would be captured. So, advice that purports to be generic may in fact be regulated depending on the context and the overall circumstances. For example, advising someone to invest in one geographical area or sector would be regulated advice if there is also an associated recommendation for a particular investment.
Finally, an area that is often queried, mainly around the definition, or what is or isn’t an “execution only” transaction.
A service consisting of the execution and / or reception and transmission of client orders relating to particular financial instruments at the client’s initiative. The firm does not give any advice on investments or assess appropriateness.
In essence, whenever you provide “focused / limited advice” it is has always been good practice / recommended that a suitable paragraph is added to the Suitability Report accordingly. Anything along the lines of:
As a professional financial adviser I would normally advise upon the full range or your financial circumstances. You have requested on this occasion that I specifically focus only on your requirement for xxx and no other matters have been addressed. Please be aware that in the event that I had conducted a full holistic financial review, it is possible that my advice may have been different.
Any queries relating to the above, please feel free to contact John Downs, IFAC