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Commission can pay the customer

I get a little exasperated with all the evangelism concerning commission. If those who seek to change things thought about it a little more, they might realise that:

If insurance companies are daft enough to pay these huge sums, why not take them? In the case of life cover, no one says you have to keep it all. You can (and I do) return a significant lump to the client (with the usual caveats on lapses). If you do the figures, it would generally take over 15 years for the client to benefit from the reduced premium on nil commission. So who would be the main beneficiary? The life company, of course. Not the right idea at all. (Bonds may be a different matter).

When we come to pensions, the Revenue and Customs, desperate as ever to raise revenue and dig Gordon out of his hole, will generally not allow the fee against tax although there are exceptions for bigger incorporated firms. In which case, taking remuneration via the commission route (with the above caveat on rebating) effectively ensures that tax relief at the client’s highest rate is available, particularly now as we have none of the previous funding limitations. So, in this case, get rid of commission and who do you hurt?

Conclusion – PFS nul points. Go away and think it through before lecturing those at the coalface. It is not your job to make insurance companies rich.

Harry Katz
Norwest Consultants


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