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Massow's trail commission firm was 'doomed from the start'

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Ivan Massow

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.”

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Readers' comments (3)

  • What a brilliant business idea though.

    Due to inertia and the fact that following RDR his 'clients' will find it hard to find an adviser who will take them on he has 100% of the future income stream for no work.

    I hope the FCA looks closely at this.

    If they can't find a reason to stop it it begs the question as to why they are trying to stop commission for advised clients but allowing it for non-advised clients.

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  • Is there no way to stop this archaic method of paying commissions to firms who don't even know, see or advise these clients.

    Providers do not help when they just novate clients over from one bust IFA to a newco without making sure they are even registered with the old firm or have client's agreement.

    Providers should give clients the choice of reduced premiums by default or if a client is happy with the service they are getting agree to carry on with trail.

    It really is that simple.

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  • His "brilliant business idea" was what caused its own downfall.

    That and the feeding frenzy of the "consolidators" of course.

    If you make a fuss in the press the regulators who aren't staring at a spreadsheet will latch onto it, in this instance the art of self-promotion and a big ego brought the concept to a rapid halt.

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