Here is a confession for you – I am a massive bargain-hunter. I regularly spend many happy hours online, disproportionately far more than any saving I might make, to shave a few quid off the cost of our household’s potential purchases.
Just to give you an example, at the back of my garage are a couple of hundred jars of Kenco, our favourite instant coffee, a bulk buy which I estimate will save us an earth-shattering £2 a week over the next two years.
Even more bonkers is my purchase of 1,400 cans of half-price dog food the year before last. My reasoning was that by the time they were used up, I would be cutting the dog food bill by several hundred pounds over that period.
Happily, I am blessed with an understanding spouse prepared to humour my madness. When I informed her what I had done, she told me it was fine, as long as I was prepared to eat all the remaining cans myself in the event of anything happening to the dogs. I have not had to do so, yet.
Given my embarrassing proclivities on the family shopping front, you might think I would be hugely excited at the prospect of someone entering the financial services market with a money-saving proposition paymemy. com/mission (nifty name) – that offers to return to consumers most of the unnecessary trail charges they pay each year.
As readers of Money Marketing will have noted, its founder and chief executive Ivan Massow is proposing to hand back 80 per cent of trail to punters who switch their investments to his new firm.
In fact, Massow’s new venture leaves me completely cold. Don’t get me wrong, I am totally with the FSA in terms of its argument that trail commission is a payment for an ongoing service that should be provided by an adviser to his or her client.
I have no problem with the argument that people often pay trail commission for a service they mostly do not receive.
What I find more interesting is Massow’s business reinventions, from niche IFA catering to the gay market to becoming an agent for Zurich, a relationship which collapsed in acrimony.
Last year, Massow was named as managing director of a price comparison site, CompareForGood, which promised to pay a large slice of its commission earnings to Oxfam.
Yet anyone searching for CompareForGood will now only find a link to BeatThatQuote, the original site that was meant to provide the white-label comparison on service on Oxfam’s behalf.
As for paymemy.com, what is disappointing is the fact that if you read the Faqs on the site you will notice there is little mention of any serious ongoing service to clients if they switch their existing assets. Almost every question relates to how you can move your money and when you can expect to be paid and when.
If you want advice in relation to your investments, whether future or existing ones, you will have to go to another adviser for it – who presumably will not mind not receiving trail commission because the up-front fee they charge will be ample reward for their services.
Massow has told the media that he is not targeting existing IFAs’ clients, only orphans who no longer have an adviser but those attracted are likely to be both.
What paymemy.com appears to be saying is because so many IFAs use trail as a way of receiving ongoing payment without delivering any service for that money, then it might as well do the same itself. In other words, let’s accept the status quo rather than force advisers to do better.
But that is not the issue. What matters is that for too many years, IFAs have allowed themselves to be sucked into a relationship with their clients where the issue of remuneration – what they are paid and the service they will provide in return – has not been properly discussed.
Nic Cicutti can be contacted at firstname.lastname@example.org