Let us set the record straight here. “The level of commission payable on financial service products far outweighs the work and service that brokers provide to their clients this is absolutely true.” These are not my words but those of Hargreaves Lansdown chief executive Peter Hargreaves.
“Around 90 per cent of IFAs have no right to be paid ongoing commission when the vast majority of long-term contracts are neglected. They think they have a God-given right to it but they do not.” Again, not my words but this time those of The Money Portal managing director Richard Craven.
But I agree with them both. I do not believe any IFA in the land would have the nerve to hand their clients a bill for the money that product providers pay them as initial and ongoing commission.
IFAs have moaned until no one wants to listen any more that they are not treated like the professionals they purport to be. The simple fact is that if IFAs stopped being so blinkered and looked in from the outside at their profession, they would soon understand why the public distrust them and why they are not treated as professionals.
The first reason is the number of scandals in our industry. Pension misselling, endowment misselling, commission bias, precipice bonds, shall I continue? There is no trust any more from consumers.
The second reason is that everyone else, apart from IFAs, knows that someone who is paid commission to sell a product is, in fact, a salesman. There are no exceptions.
Whatever arguments you may have against these statements, this is what the public think. Full stop. I know there are many exceptional IFAs out there who provide a service that their clients would never want to be without. Unfortunately, for every one of these good people, there are 10 commission-hungry individuals who are out there highlighting to the public every day how open to abuse the system is. The difficulty is that the public have no way of knowing who are the very, very good and who are the very, very bad.
My late father-in-law, David Hill, was one of the greats. The service he provided, his dedication and commitment, made him a true professional valued by his clients. Why should advisers of this standing have to put up with the level of distrust the public showers on the whole profession?
I have an answer. Remove commission. Stop working for product providers and start working for your clients. Shout it from the rooftops.
Yes, Intelligent Money is out there telling the country about the true cost of commission, and yes, Intelligent Money does have a massive PR machine behind it (yes, Max Clifford is part of this) and, yes, we are taking clients away at a rate of knots from the bad IFAs. What are we going to do with them? We are going to put them in the direction of the good advisers. As of today our sister company, Intelligent Money Advice, is open for business.
Every adviser is invited to join Intelligent Money and provide advice on a fee basis in addition to their current business activities. We are offering the Intelligent Money Advice franchise across the UK so we can put the public in touch with IFAs who will work for them, not product providers. Not everyone will be accepted and anyone found lacking the standards we set will be expelled.
Behind every Intelligent Money Advice IFA will be support, software, literature and most important, national advertising, website links to your firm and the muscle of our PR machine. Your existing business is not affected. Intelligent Money Advice is in addition.
We will change public perception of the industry and get rid of the bad firms. You have an opportunity to be part of this.
Julian Penniston-Hill is chief executive of Intelligent Money