Gedye and Sons



020 3427 5078

The Lakes

01539 532313

Wednesday 17th April 2013

How to choose a Financial Adviser

The Law Society recently took the unprecented step of urging the profession not to follow the Solicitors Regulation Authority’s new rules on recommending Financial Advisers to clients warning that it could expose Solicitors to negligence claims.

This came after the SRA libralised the rules so that referrals could be made to advisers who are not independent.

So just what is the interaction between Solicitors and Financial Advisers.  Many clients ask their Solicitor for advice on who should assist them with financial advice: this may follow the receipt of a legacy, the investment of surplus funds after downsizing, or a personal injury award.  Solicitors also may be advising Attorneys who have sold a vulnerable relative’s property and need to invest for care fees, or indeed they themselves may be so acting.

What principles should govern any recommendation ?

At all times the Solicitor must have the best interests of their client at heart and, it is submitted, that those best interests can only be served if the Financial Adviser recommended is completely independent  and free from any bias or tie. Solicitors will need to be particularly careful that they do not expose themselves to miss-selling scandals if they advise clients to use Financial Advisers who may benefit from selling particular products,  The provision of independent advice has historically been one of the fundamental tenets of the profession and not withstanding the liberalisation of the SRA’s views, I think it would be unwise for Solicitors to recommend  anyone other than an Independent Financial Adviser.  So where does this leave everyone ?

The real emphasis should be that the issue is less one of “label”, but more of the ability of the financial product or service provider to offer that product or service free from third party influence which would fetter a genuine discretion on the range of products or services available to the client.

Advisers would do well to work with Solicitors to help them better understand where full independent advice is certainly appropriate and the extent to which their advice is truly independent.

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