The Money Portal is investing £8m in two incentive schemes in a bid to retain its 1,300 adv-isers but the move will see IFA Bates Millfield move to a multi-tie model.
Bates Millfield advisers will be moved onto a panel-based proposition, with the option to go off panel and whole of market if required.
TMP says it is trying to build a distribution powerhouse and the next step will be to change its business model fundamentally to wean IFAs off the “drug” of initial commission.
Initially, Bates Millfield advisers will get 10 per cent of all turnover generated between July 3, 2006 and March 31, 2007 if it is more than £60,000 and 5 per cent if it is less.
Additionally, advisers who exceed the previous year’s turnover for the equivalent period will not pay any network charges.
TMP group head of distribution Alan Easter says Millfield’s creditors’ payment depends on adviser and revenue retention.
He says: “We are doing everything that we can to hold the community together and reward those who stay and support us. We know some of Millfield’s problems are not quite fixed and now need a period of stability.
“We appreciate that product providers are getting to the point where things need to change. New business costs are too high. We are trying to establish a relationship between TMP, the providers and the advisers to migrate adv-isers away from the drug that is initial commission.”
Network Sage is also launching a profit share scheme on January 1, which will pay back 20 per cent of all profits to its 452 ARs. Sage says it will make £2m profit this year and is on target to make £3m next year. It has also launched a practice buyout scheme, offering members a minimum of four times the annual turnover upon exit.