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‘Commission is better value for consumers’

Clients seeking investment advice get better value from a commission-based model than they would if they paid a fee to the adviser, according to Edward Jones.

The US-owned financial adviser and stockbroker says if a portfolio is put together correctly, the client should not need to change the allocation on review.

Research department market strategist Kate Warne says with the controversy over churning, there can be doubt on whether an adviser charging a fee is just looking to make switches that might not be necessary in order to justify the fee.

She says: “If you get the portfolio right in the first place, you will not need to make any changes when the client’s investments come up for review, which we will do for free.”

Warne believes that investors need to take a long-term view rather than be drawn into asset classes that have already seen good returns.

She says UK investors tend to be overweight in energy and materials and says taking a contrarian view to prevailing trends can often be important in long-term investing. She cautions against charging into property and natural resources, which have been on a strong run, urging diversification.

Warne says: “For every sector that you are excited about, there should be the same amount that you are disappointed with.”

The firm has 200 investment representatives on a whole of market basis without a fee option and is looking to expand staff numbers to 300 in the next 12 months.

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Guide: Johnson Fleming produces auto-enrolment checklist

For a job as big as managing the auto-enrolment changes, it’s important to know what has been completed and what still lies in front of you to give you the reassurance that everything is in hand. Getting the planning and project management right at the outset can help you see the path ahead and ensure everyone knows their roles and responsibilities. To help with this, Johnson Fleming has produced a checklist outlining every step that needs to be taken when preparing for auto-enrolment.

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