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How revamping commission could help the self-employed retire


You never know what you’ve got until it’s gone, and this sums up some people’s views on commission. Take, for example, the director of Drewberry Wealth Management and Drewberry Insurance Tom Conner. Mindful that the rising cost of providing advice gets passed on to clients, he believes a revamped system could help more self-employed people save for retirement.

Conner’s reasoning is simple: self-employed people do not qualify for auto-enrolment and have to fund their retirement with no employer contributions. People who baulk at paying £400 or £500 to set up a pension are unlikely to pay fees for advice as to why they need a pension in the first place. So what is the answer? To get pension providers to pay commission to advisers.

Conner says: “If it’s done the right way, what the pension gives you is an interest-free loan on the advice. You’re paying for it over the course of the contract.”

He cannot understand why the Financial Advice Market Review made no mention of reintroducing commission in some shape or form, given that it was rumoured to be on the table.

But if it ever becomes a serious proposal, he believes there should be guidance on how much commission pension providers could pay to avoid reintroducing the potential for bias.

Perhaps best known for its work in the protection market, Drewberry has recently branched out into pensions and investments as part of a move from holistic protection advice to holistic financial planning. Conner and his business partner Andrew Jenkinson set up Drewberry’s wealth management arm in December 2014 and want to add a mortgage service over the next few years.

“We have a good model on the protection side and are developing that in wealth management. We want to be the John Lewis of financial services, where consumers know you know what you’re talking about and they get what they need under one roof.”

Anyone setting up a financial services business a few months after the collapse of Lehman Brothers in 2008, as Conner and Jenkinson did, would have been wise to adopt the brace position and hope for the best. But luckily the gamble paid off.

“I didn’t have anything to lose.  I wasn’t married, I didn’t have children and I needed to look for a job anyway. Building a business is difficult. It’s a rollercoaster, with intense highs when it works well and a lot of lows. It feels like you have to take one step back to go forward.”

Conner says the range of things to consider when starting a business – everything from buying computer desks to designing the company logo – is all-encompassing. “Every piece of the puzzle you have to work out yourself and you need an income so you can pay the bills. But it’s by no means impossible – it’s difficult but not amazingly difficult.

“A lot of people who could have started a business have never given it a go but there are benefits to doing so. Most new businesses do fail but thankfully we have been successful.”

Conner and Jenkinson met at university and decided to set up on their own initially in the employee benefits market. Jenkinson was working for a big employee benefits consultancy, while Conner was growing increasingly frustrated with his job as an analyst in shipping mergers and acquisitions when the sector got hit in the financial crisis.

“Most companies at that time were cutting back on employee benefits. But we kept going at this and started arranging insurance as it was a quicker process to get money coming in.”

Drewberry focused on income protection, which had not had much exposure at that point. “Critical illness cover outsold income protection by six to one but, to us, income protection seemed to be the most beneficial to people as the risk of being off work is higher than getting one of the listed critical illnesses. Income protection seems to be the bedrock of every bit of financial planning, but not many people were talking about it and there was a void of information.”

So Drewberry Insurance needed a website, partly to fill that void and partly to generate prospective clients from people who were searching for information. “We were giving advice during the day then doing copywriting and web development at night.

“Over time I’ve focused on the management of the company and the website.”

Drewberry is big on creating interactive tools for consumers and educating them about their finances. “The tools definitely work. People don’t want to read these days, they are lazy in consuming information. People are more engaged with the tools, they like playing with them and they like to answer questions.

“Tools enable people to tailor the specifics to the person, rather than having to dig out the bits that are relevant to them.”

Getting more information out there is one of the ways the industry is trying to raise awareness.

Conner likes the idea of building on the Seven Families initiative to create an independent body that is consumer facing and focused on protection in general, not just income protection. He says one of the problems is that when banks pulled out of advice, it meant there was “one less touch point” for creating awareness of the benefits of protection.

“Maybe more advisers can take it upon themselves to do a bit of marketing here and there.

“One area where we could do more is mortgage brokers. Some are fairly good in offering protection but I know at least five brokers who don’t do any protection whatsoever and they are not alone.”

Five Questions

What’s the best bit of advice you’ve received in your career?

Unless you try you never succeed – in other words you have to be in it to win it.

What keeps you awake at night?

Nothing, I sleep like a baby, I’m asleep within 10 minutes.

What has had the most significant impact on financial advice in the last year?

Pension freedoms. So many people have so many questions and this is an area that advice can make a difference, providing clients with good value for their fees.

If I was in charge of the FCA for a day I would…

Look into the FSCS levy. Over the last year the levy has pretty much doubled and its looking that its disproportionately falling on advisers. The cost of providing financial advice is high and that is passed on to clients,  so only the wealthy can afford financial advice

Any advice for new advisers?

Spend time to undersand particular situations and needs before talking about the products that might be able to help. You need to know the products inside out and read the terms and conditions.


2015-present: Director, Drewberry Wealth Management

2008-present: Director, Drewberry Insurance

2008: Investment banking analyst, Jefferies & Company

2007-2008: Studying for MPhil in Finance, University of Cambridge

2005-2006: Economist, HM Treasury


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. “If it’s done the right way, what the pension gives you is an interest-free loan on the advice. You’re paying for it over the course of the contract.” That’s an interesting observation and worth more thought.

    Commissions were vilified because they were abused, which doesn’t mean that commissions themselves were wrong. The FCA tackled the symptom, not the cause.

  2. Thus it always was 3% commission spread over 6 years of the contract and 0.5% trail for ongoing advice. The trouble was the FSA couldn’t see that the simple solution was to fix the maximum commission and trail at 3% + .5%! All that they could see was the amount of commission taken by unscrupulous advisers which often was far more than that.

  3. richard wright 22nd July 2016 at 3:45 pm

    I agree here as the self employed are definitely victims Of the advice gap. If someone wants to pay £250 pm into a pension and requires full advice 3 plus a half does not work for any adviser and they will not take on that business. 20 or 30% of first years premiums paid over 12 months is not paticularly great for the client and takes us back to the dark old days of front end loading which previous regulators more or less outlawed and the other option of the client paying a large upfront fee to advise on and set up a relatively small regular premium contract is totally unappealing to the client so commission paid upfront as a loan and charged over the life of the plan seems to be a sensible route to consider. I know of no advisers that are prepaired to advise on regular premium business anymore unless its In conjunction with other lump sum and or protection business.
    It needs looking at , where are our trade bodies? Garry Heath your thoughts?

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