New ICAEW code of ethics and referrals to financial advisers

July 11th, 2012 by

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Dan Woodruff

Dan Woodruff

Certified Financial Planner & Chartered Wealth Manager at Woodruff Financial Planning
Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.
Dan Woodruff

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accountants referrals to financial advisersThis article examines the proposed changes to the ICAEW code of ethics and how this will impact on accountants’ referrals to financial advisers after the Retail Distribution review takes effect from January 2013.

The current approach of your code of ethics

Currently, you are required to give investment referrals to advisers who can demonstrate an objective approach.  At the moment this means giving referrals to Independent Financial Advisers (IFAs).  Accountants’ referrals to financial advisers who are not independent can be given so long as you are confident that they are able to recommend products which account for a sufficiently wide portion of the market.

We actually go further than necessary since we are also Certified Financial Planners (CFPs), which is a much higher level of qualification than is currently required.  We focus on Financial Planning and Investment Management, which look at the clients’ fundamental financial position rather than simply seeking to find a suitable product.

How the code of ethics will change from 2013

This article is based on the proposed code due to be ratified in October 2012.  The board’s intention is to retain the current approach to accountants’ referrals to financial advisers but that this will reflect the new terminology to be used from 2013.  Financial Advisers will then be known as Independent or Restricted.  Independent Advisers (as we will be) will be required to demonstrate not only that they advise on all markets, but that they also recommend all types of product within that market.

You will still be able to recommend a Restricted adviser, but you will need to demonstrate that this adviser is suitably independent.

Again, we would agrue that our service goes beyond the requirements given that we offer a much more holistic approach.

The retail distribution review – what you need to know to give accountants’ referrals to financial advisers

  • Financial advisers will be required to have a higher level of qualification
    We are already far in advance of the required level.
  • Financial advisers must agree their remuneration with clients
    We already meet the requirements, and have done so for 5 years.
  • Clearer definition between independent and restricted advisers
    Essentially advisers must be independent or restricted. We will remain independent.
  • Higher professional standards
    This is to be applauded, and we already meet the standards required through our membership of the Institute of Financial Planning.

For more information see here.


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