Massow's trail commission firm was 'doomed from the start'
Advisers says Ivan Massow’s trail commission return business was doomed from the start, following news that the service has been shut down due to escalating regulatory costs.
Massow, a former IFA, launched Massow’s in September 2011 with a blaze of publicity across the national media. It pledged to return the majority of the annual trail commission clients were paying if they switched from their current adviser. Massow said the business would return 80 per cent of the commission and keep 20 per cent itself.
The firm has written to clients informing them that the firm will keep 100 per cent of their future trail if they do not move away to another adviser.
A note sent to clients of the service this week says: “We would like to inform you that Massow’s will no longer be able to rebate commission as of 19 August 2013. If you have paid us a joining fee, this amount will be refunded in full. If you are owed any money up until 19 August 2013, this amount will be repaid to you.”
The note then gave clients two options, either move to another advice firm or allow Massow’s to keep all future trail. It says: “You could do nothing - but we will not be able to rebate any commissions we receive, and will keep them. However, we will still show up as your servicing agent. This may be useful for people who get little or nothing back and quite simply can’t be bothered to move their affairs.”
Investment Quorum chief executive Lee Robertson says: ”All businesses are struggling with increased regulatory costs but a business set up like this was always perhaps doomed to struggle more than others.”
Concept Financial Planning managing director Paul Richardson says: “The writing was on the wall from the start for this business, to take 20 per cent of the trail for doing nothing was never going to work.”