As an adviser who charges fees and takes commission (invar-iably partially rebated), I really do not care how I am paid as long as it is sufficient (in my view) for the work undertaken. I get irritated by providers manipulating their charging and remuneration structures to suit those who are coy about how much they earn. Exit penalties to suit networks? Buying business with enhanced rates for volume – network pressure?
However, if fees were to become the norm, what about VAT? I am very careful to ensure that my total fee income stays below the VAT threshold. VAT is not a problem for corporate clients and those owning their own (VAT-registered) business. But for those people for whom all these reviews are supposed to benefit, they will just end up paying (at least) 17.5 per cent more, that is, if they are going to seek advice at all.
On single-premium business, I am more than happy to have as much as 3 per cent – often a great deal less – and trail of 0.25-0.5 per cent is very welcome. It is the insurance companies who prefer regular premiums. It gives them a secure cashflow, client loyalty and provides an opportunity to puff up their accounts.