What Is Independent Financial Advice?

In Italy, financial advice is regulated by the Consolidated Law on Finance (TUF) and the European MiFID II directive. The single register kept by the OCF (Organismo di vigilanza e tenuta dell’Albo dei Consulenti Finanziari) distinguishes three sections: financial advisers authorized for off-premises offer, independent financial advisers and financial advisory companies. Independent advisers and companies are the operators that provide advice on an independent basis; they do not place products and do not manage assets, but accompany the client in financial planning.

TUF (Normattiva) · MiFID II Directive · OCF – Register

Differences from “Traditional” Advice

MiFID II imposes specific requirements on anyone presenting themselves as an independent adviser. According to article 24, if an intermediary claims to provide independent advice it must:

• analyse a wide range of financial instruments: it must evaluate a sufficient number and variety of products of different types and origin, without limiting itself to instruments issued by itself or by entities with which it has close ties. The FCA Handbook (United Kingdom) reports the same obligation: the intermediary must evaluate products sufficiently diversified to meet the client's objectives and cannot limit itself to those of its own group.
• renounce inducements and commissions: the independent adviser cannot accept or retain commissions, monetary incentives or non-monetary benefits from third parties in relation to the service provided; he can receive only small benefits that improve the quality of the service and do not compromise independence. The remuneration must therefore come solely from the client, typically in the form of a fee.

“Non-independent” or “restrictive advice” allows the intermediary to receive incentives from product issuers and to limit analysis to a restricted universe of instruments. For this reason advisers tied to banks or sales networks are often remunerated based on the commissions collected on the products placed, generating potential conflicts of interest.

MiFID II – Article 24 · FCA Handbook – COBS 6.2A (inducements & independent advice)

Fundamental Principles

In addition to the obligations above, MiFID II establishes that intermediaries must always act in the client’s best interest. In transposing the directive, CONSOB reminds that the centrality of the client pervades the entire regulatory framework: intermediaries must serve the best interests of clients, with a high level of fairness and transparency. This principle translates for independent advisers into:

• Impartiality: the absence of commercial links with banks, insurers or SGRs (asset managers) allows them to formulate recommendations based solely on the client’s needs.
• Breadth of analysis: evaluation of different instruments (stocks, bonds, funds, ETFs, insurance policies, etc.) to build tailor-made solutions.
• Cost transparency: the fee-only remuneration is agreed in advance; there are no hidden costs related to rebates or inducements.

CONSOB – MiFID II (client centrality)

Benefits for Investors

Choosing an independent financial adviser entails several practical advantages:

• No conflicts of interest: the adviser works exclusively for the client and does not receive commissions from product providers, reducing the risk of recommendations motivated by incentives.
• Broader and more personalized choice: the obligation to analyze a sufficient number of different instruments ensures that the strategy takes into account the entire market, not just the offering of one bank or producer.
• Holistic planning: independent advice does not just select individual products, but considers the total assets (liquidity, investments, pensions, taxes, insurance coverage) and the client’s life horizon.
• Greater transparency and control: the client knows in advance the cost of the service and can monitor the portfolio’s performance without fear that the adviser earns from the transactions carried out.

Conclusions

Independent financial advice represents a relationship model that places the saver at the center, as required by European and Italian regulations. MiFID II rules state that anyone claiming to be independent must examine a wide range of instruments and refuse incentives from third parties. This protects the investor from possible conflicts of interest and fosters more objective, transparent and tailor-made advice. However, it is important to check that the professional or company is effectively registered in the OCF under the sections for independent financial advisers or financial advisory companies.