Financial advisers represent the largest group of wealth managers by numbers. There are different types of financial advisers and the one you choose will influence the service you receive.

Before depolarisation in June 2005, financial advisers were divided into two categories. Independent financial advisers (IFAs) could give advice and recommend financial products from any provider across the whole market. Direct sales forces could sell only the product of their employer.

Since June 2005, however, only advisers who offer the option for you to pay fees for advice can be called independent financial advisers (IFAs). There is now a new breed of independent adviser, known as whole of market advisers, who can recommend products from any provider and offer the full range of wealth management services, from estate planning to investment management, pensions to life assurance. The difference is that they do not offer fee charging. Their remuneration is entirely based on commission.

In theory, IFAs offer unbiased advice to their clients and can recommend the most suitable products, if any, after researching all the providers in the market.

While the major advantage of IFAs is that they provide access to all the products on the market through a qualified practitioner and the most appropriate financial solutions, this does not always occur in reality. Some IFAs will only choose from a limited list of products as they do not have the time or resources to review continually all products on the market.

As IFAs can be paid through commissions from product providers, there are questions over potential conflicts of interest and bias towards certain product providers. Some concentrate on selling products rather than offering a comprehensive financial planning service. It is important to remember that you are effectively paying the commission as it will be included in product charges and therefore does not constitute “free advice”.

Tied agents can only advise on the products of one provider. They may work at a bank, building society or be a representative of an insurance company. The tied agent is effectively a salesman for the product provider he represents.

Having access to just one product provider is not ideal but it does not necessarily mean you will receive poorer advice than from an IFA given that choosing a product should come at the end of the advice process. It is better to receive good planning advice from a tied agent than poor advice from an IFA.

Multi-tied agents are financial advisers who recommend products from a limited list of providers rather than from the whole of the market. This category of IFAs was formed under the depolarisation rules. The regulator, the Financial Services Authority, hopes that by giving advisers the chance to link with several providers rather than tie to just one, consumers who do not use an IFA will be given greater product choice.