# Independent - What does it mean?



## MyAdviser (22 Jan 2003)

Should all advisors use the word independent? I have come across many examples where "Multi-Agency Intermediaries" or "Restricted Intermediaries" have used the word independent when describing their service to clients. Is this appropriate?

My view is that "Independent" should only be used where you are not limited in the solutions you can advise on for your client. Once you are restricted to a panel of suppliers then you are not independent. Any views?

Regards Michael
www.myadviser.ie
Authorised Advisor & Discount Broker


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## Liam D Ferguson (22 Jan 2003)

Hi Michael, 

Dictionary definition of Independent...



> _in·de·pen·dent    ( P )  Pronunciation Key  (nd-pndnt)
> adj.
> Not governed by a foreign power; self-governing.
> Free from the influence, guidance, or control of another or others; self-reliant: an independent mind.
> ...



I have highlighted the definition most relevant to this discussion.  Multi Agency Intermediaries are not dependent on or affiliated with a larger or controlling entity; most are entirely self-sufficient businesses.  So I believe Multi Agency Intermediaries, where there is no affiliation or dependency on a life company are entirely correct to use the term independent if they wish.  

Tied agents, on the other hand, are affiliated to one life assurance company, and so should not be permitted to use the term independent. 

Regards, 

Liam D Ferguson
www.ferga.com


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## Dusty (23 Jan 2003)

*Independent*

Hi Liam & Michael,

I would have focussed in on *Free from influence..*

I think that it's nigh on impossible to find a person in any walk of life the is truly independent. Everyone has their price and we can all be influenced in some way. 

I think that it is more to do with morals than advice when it comes to recommending financial products. This is because of the way the remuneration system is set up. I don't accept that Fee Only is the answer either because that can be manipulated also.

Who amongst us here can say that they are not lacking in any moral fibre whatsoever?


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## Amellion (23 Jan 2003)

*semantics*

I got suspicious when I saw Liam pulling out the dictionary definition....

The whole notion of independence in the provision of financial advice in Ireland is one of degree- on the face of it,AAs should exhibit a greater degree of independence than multi/RAIPIs.

However the reality is that incentives based on the level of business transacted (such as over-ride) are widespread.It may well be that the better quality RAIPIs(such as Liam )offer a more independent service than many AAs who purport to be (& should be given broader range of solutions) "independent".

Until we have a more intelligible disclosure regime and nonsense like over-ride is outlawed,I fear advice which is tainted/compromised will be all too common.


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## ClubMan (24 Jan 2003)

*Semantics*



> ...and nonsense like over-ride is outlawed..



I don't think that it should be outlawed. In fact if it is 'used' in the correct manner then client and adviser are winners.

One of the reasons that more and more pension business is being done on a reduced/nil commission basis is because of over-ride.  

_Edited by ClubMan to fix formatting._


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## MyAdviser (1 Feb 2003)

*Re: Independence*

There is a key difference between an Authorised Advisor and a Multi-Agency Intermediary and that is the AA has to shop the whole market for the best solution. This activity, if done properly, will deliver the best solution for a particular client regardless of where that solution is found. 

For me this is real independence and therefore should in some way be isolated from the activity of choosing the best solution from a short list of suppliers. The CB has constructed these categories of brokers/intermediaries  but consumers struggle to tell them apart. Just because a firm is not financially dependent on one supplier does not, in my view, make them independent in the context of the service offered to the client. (Although it may fit the definition of the word in other context). It is the context of the provision of advice and financial services that I am interested in.

It is also nothing got to do with how remuneration is paid. Although I accept the points about their influence on decision making an AA still has to show that the best solution was provided, all a tied agent or a restricted intermediary has to do is show it was the best from the limited list available. 

Independence from the consumers perspective has to stand for something and unfortunately if it is used by virtually all intermediaries it becomes meaningless.

I believe, based on discussions within the industry, that if a broker wanted to be seen as independent it needed to be an AA. This general opinion has not found its way yet into consumer opinion, possibly hindered by referring to services which search a hand full of selected suppliers and still call themselves "independent"

Don't get me wrong on this, I am not having a go at anyone it is an issue that a client raised with me the other day and I was interested in this forums reaction. I think the word should be defined in a similar way that the word guarantee is defined in various codes of practice. It is an important word whos meaning needs to be clarified and then protected.

Regards M


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## Liam D Ferguson (1 Feb 2003)

*Re: Independence*

Hi Michael, 

*"The CB has constructed these categories of brokers/intermediaries but consumers struggle to tell them apart."* 

I agree.  But from the consumer's point of view, I think that there's an issue here far more important than use of the term "Independent".

It's that public awareness should be raised on the matter of the difference between a Multi Agency Intermediary and an Authorised Advisor.  Once that happens, consumers will know to expect advice on the full range of products when they visit an AA.  By extension, they will know that if an AA seems to be steering them towards a commission-office product without sufficient justification by reference to it's non-commission-office competitors, they haven't found a professional AA.  They've found a Multi Agency Intermediary masquerading as an AA.  

If the public become more and more aware of the distinction between a Multi Agency Intermediary and an Authorised Advisor (and I believe this awareness is slowly improving), the term Independent will become irrelevant - the public will know the true technical term for the advisor they are dealing with.


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