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Clerical claims Sandler will put 20% squeeze on commission

IFAs will have to concentrate on their wealthiest clients if they are to operate profitably after Ron Sandler&#39s review into retail investment, claims Clerical Medical.

Clerical believes Sandler&#39s review could result in commission being slashed by around 20 per cent in most product areas.

Head of strategic marketing David Shelton believes the review is likely to have a far-reaching impact on the majority of products and leave IFAs facing a fight for survival in a lower-margin world.

To counter this income squeeze, Shelton says IFAs must restructure their operating models to allow them to spend as much time as possible advising their wealthiest clients.

At present, he believes IFAs are offering too extensive a service to low net-worth customers who may only buy a product every few years.

But with commission likely to plummet, Shelton says it is imperative that IFAs should tailor their service to the worth of the client.

He says: “I can imagine the Sandler review hitting commission on most products by around 20 per cent. IFAs who do not adapt their operating models to counter this will struggle to cope because they have a tendency to spend too much time with the less wealthy.”

Informed Choice managing director Nick Bamford says: “It is bit of a random figure but from a commercial point of view I cannot fault the logic.”

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