Ivan Massow targets IFAs' trail with new launch
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Former IFA Ivan Massow has launched a new proposition which pledges to return the majority of trail commission clients are paying if they switch from their current adviser.
Massow’s says it will return 80 per cent of the trail commission and keep 20 per cent itself and is targeting clients who are not receiving any ongoing advice.
According to an article in the Independent, the firm will not be offering advice itself but has set up referral arrangements for individuals requiring advice. The firm’s website provides a function for individuals to be put in touch with an IFA.
Speaking to the Independent, Massow says: “The first priority of our advertising campaign is going to be education. Most people simply don’t know they’re paying these fees - not a single person I’ve asked knew of their existence.”
On its website, the firm says: “You probably haven’t heard of ’trail commissions’, but up to 1.5 per cent of the value of your investments each year could be paid out to your Independent Financial Adviser as commission. We will find this commission and pay 80 per cent of the full amount back to you. This means that on a typical pension we would send you more than £60,000 over the term of the policy.”
“Your policies remain unchanged, and you don’t need to contact your existing IFA. We only take our 20 per cent fees from commission we successfully pass on to you. If we’re unable to track down the commission, it will not cost you a penny.”
The firm calculates its £60,000 “typical pension” figure based on a pension fund of £100,000 with trail commission payable over 30 years
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Readers' comments (20)
Anonymous | 5 Sep 2011 9:20 am
What a muppet!
He's forgotten that it is ILLEGAL to pass on pension commissions as cash back to clients as this will be an UNAUTHORISED PAYMENT resulting in withdrawal of approval. Who's going to fund the client's tax bill Ivan? You? Don't think so.
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Huw Jones | 5 Sep 2011 9:31 am
One issue Mr Massow might have overlooked in his example is the unauthorised pension payment charge for clients under 55 benfitting from their pension.
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Anonymous | 5 Sep 2011 9:34 am
Brilliant! Another failed IFA trying to make a quick buck.
If he was successful enough with his own business he wouldn't need to captalise this little scheme.
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Anonymous | 5 Sep 2011 9:38 am
Interesting that he quotes up to 1.5% of your investments could be paid to your advisor when the reality is that most are probably working on 0.5 - 1%. It grabes the headlines!
What will he do sweep up all these clients, give no advice for the 20% and then sell the business like everything else he has been involved with.
Another get rich scheme for himself which has little concern for the client.
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huw | 5 Sep 2011 9:57 am
I hope this type of thing isn't going to be feature of the post RDR landscape. The scheme appears to be illegal, unprofessional and sensationalist. Hopefully the FSA will act swiftly.
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Andrew Oliver | 5 Sep 2011 10:00 am
On the subject of rebating commision on pensions this may be allowed. Please refer to RPSM 09106040 which was an update issued by HMRC on the 4th october 2010 (all 192 pages of it). If you google RPSM 09106040 it wioll take you to the page.
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R Mack | 5 Sep 2011 10:04 am
What does Ivan intend to do when he refers a client to an IFA when they want more advice?
The IFA might then build in trail for ongoing advice, does Ivan keep his 20% or does the IFA who will be providing the service keep it as should be the case.
This beggars belief that he thinks he can get away with this ambulance chasing scheme!!
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Ken Durkin | 5 Sep 2011 10:23 am
If commission is "cost of advice", then rebating what was already agreed as earnings for a third party must count as an unauthorised payment. But if commission is a cost paid by the product provider for marketing,distributing and maintaining the product, then to cut costs for maintaining the product would not be an unauthorised payment. It all depends on how "commission" is defined.
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Stuart Rathbone | 5 Sep 2011 10:37 am
What a great idea thank you Ivan you will save me the time & expense of weeding out the policy holders from my client bank leaving me more time to invest in my true clients who value my service.
This is just another business model which looks attractive in the ever changing landscape of commerce. It is just another iteration of the HL model which will suit people who do not value our input and feel that they can do just as good a job themselves.
I know this will mean a loss of income stream in the short term but do not think that you legacy trail income will fall off a cliff. it will take several years before this has much impact and hey if Massow offers 80% if you can do it profitably without business risk offer 85% and then see what happens.
This is a time of great change for us all and the main thing we need to focus on is running a profitable business where client/policy holders get what they pay for & we get paid for what we do.
Interesting times as the Chinese would say
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steven farrall | 5 Sep 2011 11:46 am
Good idea Mr M - consumers buy differences, not sameness. One thing though:-
"This means that on a typical pension we would send you more than £60,000 over the term of the policy". I do not believe that as the average (i.e. typical) pension fund is about 30K (?). And as this will be built up over a working life of say 40 years his numbers are way off.
Time for a referral to the ASA methinks.
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