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Actuaries scrap commission

Leading actuarial consultantcy Watson Wyatt is ditching commission-based advice in favour of time-based fees.

The consultancy is taking this step with immediate effect, replacing the previous remuneration choice of commission or fees for its clients.

It is issuing a letter to all clients who currently receive advice exclusively on a commission basis to tell them of the decision.

Watson Wyatt says this move affects mainly long-standing clients who were advised by Wyatt until the merger of R Watson and Wyatt in 1995.

The adviser says the switch reflects its view that charging fees is the most cost-effective approach and ensures that advice is not influenced by commissions generated from particular investment products or providers. Any commission arising from advice will either be offset against the value of time chargeable, reinvested in the product or reimbursed to the client.

Clients who do not want to switch to fees are being told to contact IFA Promotion&#39s help-line to find an alternative IFA as the firm says it is not allowed to recommend another IFA. The remainder must tell Watson Wyatt they are happy with the fee-based approach within two months.

Watson Wyatt PR manager Bruce Wraight says: “We work on a fee basis across the whole of our business and believe this is the best way to do things.”

IFAP chief executive David Elms says: “They are taking a constructive and responsible line by referring people to IFAP. We have seen no real trend of people switching to a fee-only basis and 90 per cent of IFAs offer the choice of fees or commission.”

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