From gold to guidance...the three types of help

THESE are the different types of financial advice available:

1 INDEPENDENT: The ‘gold’ standard of advice comes from independent financial advisers, who consider all options across the whole of the market. They can assess your needs holistically, spotting how one individual concern might impact another, for example the tax implications of a particular investment.

2 RESTRICTED: Usually found at banks as well as standalone firms. Some are restricted by their area of specialism, such as pensions or investments, but can still recommend any product from across the whole of the market. Others are restricted by what products they can recommend or sell. In some cases restricted advisers are limited in both ways – by specialism and product range.

3 GUIDANCE: A computer algorithm can help customers decide their next steps and is often called a ‘roboadviser’. These are no substitute for recommendations from a fully regulated and qualified human being, but it is a cheaper and simpler route for people with basic financial needs. Increasingly it is being adopted by online companies – such as Nutmeg, Moneyfarm and Moneybox – to help customers identify a suitable investment portfolio, which is then managed on their behalf. However, experts say unless a human is behind it offering regulated advice, it is not advice at all – instead it is ‘guidance’.