Investment advice opportunity in the United Kingdom
The concept of independent advisor is popular in U.K., which is born under U.K. polarization rules. Being independent of any insurer or third party one can recommend products freely from any source. Non-independent or the tied advisors represent their respective companies and can recommend only products from that company but conflicts of interest may arise where remuneration is linked to the product.
Since 1st December 2004 the Financial Services Authority has introduced the notion of multi-tied adviser who may represent more than one company. Examples of multi-tie advisory networks are Intrinsic Financial Services and Openwork.
It is a rule implied by the authority that Independent Financial Adviser must be willing, able, FSA authorized to accept payment from his client by fee rather than by commission, and this must be outlined in the introductory meeting. But an advisor cannot be called independent if he works only on a commission basis. There are some specific regulations in U.K. called polarization rules issued by the Financial Services Authority. The FINRA is held responsible for the activities of more than 5,050 brokerage firms, approximately 172,050 branch offices and more than 663,050 registered securities representatives in United States. Possessing licenses is a must for stock broker and financial advisors to provide any consultation on investment in securities. For example, Series 7 (stock broker exam), Series 63 (state exam), and Series 65 or 66 RIA Registered Investment Advisor Law exam are necessary to promote the sale of stocks. Any adviser who charges a fee for investment advice would need to also have the Series 65 or 66 license. So one can call himself a financial planner but not an investment advisor until he is registered and has license. Some brokerage firms still claim exemptions for those employees who are engaged in selling fee based products and services. There are some investment banks which help the public and private corporations to raise funds in the capital markets as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
These are different from the commercial banks which directly involve themselves in retail loan and cash deposits. Lately the distinction is quite blurred as commercial banks started offering more investment banking services. Initially created in the wake of 1929 market crash, the U.S. Glass-Steagall Act stopped the banks from accepting both deposits and underwriting securities. It was actually repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks and brokerages, though sometimes integrated into single firms, they in actuality differ from one another as brokerages assist in the purchase and sale of stocks, bonds, mutual funds etc.