I have now read the report off the FSA website and it appears to me that the one concern which came across from it was that some IFAs are influenced by commission amounts available from the product providers.
That, to me, is all there is to it. So why they have spent so much time and money researching the whole provision of advice defeats me. Surely, all that is required is to make all commission amounts the same, say, 3 per cent plus 0.5 per cent renewal to cover continuing advice to clients.
What so many commentators in the industry and those report-ing on it do not fully realise is that IFAs do not or should not sell products. This is an important point. I am an IFA and work entirely for my client to find the best product(s) for their needs. Generally, I am paid by commission, with which all my clients bar none are entirely happy. They know exactly how much this will be before they decide to proceed.
They know that this method of remuneration enables me to run my business, to give them lifetime free advice and to promote or market my services to others. It also allows me to spend whatever time is necessary with low-net-worth clients to advise them on how to improve their situations and without either them or me having to keep an eye on the stopwatch.
They will not need to worry about ringing me at any time for further advice because no bill will be sent. This will put off an awful lot of clients who, frankly, need advice more than those who can afford not to worry about advice bills.
Commission is not a dirty word. The Government uses it to raise taxes, newspapers use it to raise profits from sales and just about everyone who trades adds a percentage to cover overheads. So let us have some common sense here and tell the FSA to think again by just capping commission levels, as for a short time in the 1980s,so there can be no bias because of differences among providers. End of the problem.
Derek Vivian IFA, The Ethical Partnership,Whyteleafe, Surrey