View more on these topics

&#39Commissionto be slashed across board&#39

Up-front commission for IFAs will be slashed by two-thirds by 2003 as stakeholder prices are applied to all financial products, claims Cap Gemini Ernst & Young in a report.

The report, which surveyed the country&#39s biggest insurers and IFAs, predicts that nine out of 10 financial products will carry a 1 per cent charge by 2003.

It says life offices will not be able to afford large up-front commission to IFAs when they cannot recoup revenue from product charges.

The report says cuts will not be felt immediately as life companies will continue to pay IFAs initial commission in an effort to buy market share and keep their client base.

But it says this will sparka move towards fund-based renewal commission.

It believes reduced commission will force e-commerce to the forefront. To bring down their own costs, IFAs will demand an extra range of support services on an electronic basis.

Cap Gemini Ernst & Young vice-president Shaun Crawford says: “Renewal commission encourages IFAs to keep their clients with the same pension fund.”

Maddison Monetary Management managing director Mark Howard says: “The industry cannot support the current method of remunerating for advice. We have got to embrace different ways of getting advice paid for or we will die as an industry.

“Charging fees will make us professional advice givers rather than product sellers and we can earn every time we deal with a client.”

Scottish Widows head of IFA development Robert Wyllie says: “The amount we can recoup in charges will affect IFA commission.

“But this does not spell the death of the industry. IFAs have been adept at changing their business operations. The industry has proved it can live with change.”

Recommended

Fairplay and Crowe launch cash life assurance plan

Fairplay Insurance Services and Crowe Life are launching a life assurance product aimed at people who do not have a bank account. The life assurance plan can be paid monthly in cash through any Post Office in the UK, as well as annually by cheque or postal order. Fairplay managing director Chris Jordan says: “There […]

L&G feels the pulse of healthcare

Legal & General has entered the healthcare investment market with its global healthcare and pharmaceuticals unit trust. The fund is aimed at experienced investors who want to broaden their portfolios with some exposure to the growing market in healthcare research and technology as well as medical drugs. Tracking the FTSE all-world health and FTSE all-world […]

DBS recruits Duff

DBS has announced the appointment of Howard Duff as network recruitment manager for the north of England. Duff&#39s will be forming part of a new team to spearhead the company&#39s drive to build its member base. He was previously development manager with Misys IFA services where he was in the sales team responsible for recruiting […]

Sink or swim as Perpetual faces merger

Perpetual has finally found itself a buyer after six months of talks, bids and rumours.Since May, such illustrious names as JP Morgan, CGNU and Allianz have been linked to the Henley-based fund man-ager. But with the signing of a £1.05bn deal by US investment house Amvescap two weeks ago, the process has swung full circle, […]

The savvy consumer

In last year’s FCA thematic review of the mortgage market, one of the key things highlighted was the “savvy consumer”. That’s the client who comes in the door with a very clear idea of what they need and expect you to get them it. They don’t think they need advice, they have after all consulted […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com