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OPINION

State of independence

State of independence
January 11, 2013
State of independence

It's still worth picking up a copy - there are plenty to be found online - because despite being more than 30 years old, much of the advice is still relevant, and not just for beginners. One suggestion, in particular, struck me: "Before buying or selling, even on a strong recommendation [from Investors Chronicle], apply a critical mind to the reasoning...and above all see if the advice matches your personal circumstances".

That last point is especially important - although we offer a wide range of ideas to meet different styles and needs, there is no one size fits all answer to investment. That's why, in the days of 'Beginners Please', the Investors Chronicle offered its own 'Advisory Department', giving readers, for a small fee, "the benefit of personal advice on quoted stocks and shares…and portfolio reviews".

This, though, was in the days before, in the interest of investor protection, regulation was introduced that prevented us giving one-on-one advice. But we still offer generic pointers in the form of our weekly reader portfolio reviews. This week's cover feature aggregates observations on the dozens of portfolios we've received - suffice to say, we see the same mistakes time and time again, but also many well constructed portfolios worth learning from.

The provision of financial advice is likely to be a thorny issue this year as a consequence of the newly implemented Retail Distribution Review (RDR), which bans the payment of product commission to advisers. The theory is that without the incentive to push customers into high-commission products, investors will enjoy a double win of lower charges and better products, including non-commission paying products such as ETFs and investment trusts that they have historically avoided. The higher level of qualifications demanded of advisers should, in theory, bring about a higher quality of advice, too.

But it won't solve everything. Many, for instance, are being left without any advice as underqualified IFAs exit the market, or dump less profitable clients. And, as Moira O'Neill discusses in her Smart Money column, RDR is still no guarantee of independence, especially when it comes to the poorly understood grey area between restricted and independent advice.

Of course, it's still worth paying for advice when one's financial affairs are complicated. But we maintain that individuals are perfectly capable of chosing specific investment products without the help of paid advisers - the Investors Chronicle's Top 100 Funds is as good a starting point as any. Certainly whatever RDR brings, we can guarantee that our views are genuinely independent.