How the changing face of being able to get advice will affect you

In the days before advice got regulated there wasn't any real clear distinction between the advice you would get from an insurance salesman and those who gave so-called independent advice. Twenty one years after regulation first came in, the regulator - the Financial Services Authority - is still making its mind up as to what's the best way ahead. Today it issued its latest paper, a tree pulping 165 pages worth, which creates their blue-print for how you can buy products in the future.

Up until now, most of us when taking advice from somebody to buy a product, have paid for that advice by agreeing the adviser can get a commission from the insurance company that they've introduced our business to. A rather smaller number of us have paid for advice by way of fees. Industry gurus have argued the pros and cons of each approach for as long as the two methods of payment have been around. Let's just leave things at acknowledging that each does have its good bits, and move to where FSA is taking us.

To keep each possible group apart FSA has invented new labels of "independent" adviser, "restricted advice" and "simplified advice processes" (which is FSA speak for very restricted advice). As descriptions these look OK, and incomprehensible twice over. We're not sure what the actual differences between the last two are yet.

To be an independent adviser you're going to have charge your clients a fee. There might be one or two clever ways for these advisers to avoid the pain of sending their clients a bill in just the same way as a lawyer or accountant does, but insurance companies are already quietly planning to gear up their own salesforces to occupy the middle ground of restricted advice. Whilst any salesman should be qualified to more or less the same standard as an independent adviser, they'll have to make it clear that, at its simplest, they are selling you something on behalf of the insurer.

Neither of these approaches are "good" or "bad"; going to an independent adviser is generally going to be expensive, and going down the restricted or simplified advice routes might always leave you with a niggling doubt that you haven't found the best deal.

Fortunately there is an emerging cost effective alternative which harnesses the power of the internet. As we generally get more used to making the internet our friend to research all sorts of purchases we'll see more companies set up sites which will direct you towards making a purchasing decision which always leaves you in control, and potentially at a fraction of the cost - and time - of using a traditional adviser. If you like what you see, buying will be nearly as easy as buying a TV online. And if you don't like what's on offer from one web site the chances are that another site will be filling the gap very quickly. Definitely one to watch out for.

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