Most of the correspondence I have read on the subject of commission fees seems to have been from personal financial planners.
From this, one might think that perhaps IFAs dealing in the corporate sector consider themselves above all the rancorous debate on this subject. Are we to assume that companies have no problems with paying fees in preference to commission? Apparently not.
The other day, I spoke to a former colleague who still works almost exclusively in the corporate sector. Surprisingly (to me), his practice is picking up quite a few worthwhile accounts with companies who have already been paying fees for some time, often to national IFA firms.
These are clients who have tried the fee route yet become manifestly fed up with paying them, irrespective of whether they are on a monthly retainer basis or itemised for every letter opened and every phone call made or received.
Bear in mind that these are organisations quite familiar with the different systems by which they can pay for advice and ongoing admin support. Yet now they are voting with their feet and taking their business to practitioners who are able to operate satisfactorily purely on commission.
Presumably, the time spent by fee-charging IFAs on recording billable time, issuing invoices, chasing up outstanding bills and banking payments received has to be factored into the equation as well, not to mention the extra burden of VAT.
If this is the FSA's idea of streamlining the relentlessly increasing burden of regulation combined with making advice more affordable and more accessible, they could hardly have got it more badly wrong.
So, while fees may work for a small, exclusive minority of IFA firms, the vast majority of the evidence points to the fact that, contrary to what the FSA is trying to ram down our throats, not only do the majority of private individuals prefer the cost of advice to be bundled within the cost of the product but so do many companies as well.
Is anybody at the Treasury or at Canary Wharf listening? Chance would be a fine thing. Think of an agenda, organise a poll of 50 people to get the desired answers, cast that agenda in concrete and then defend it as the only right way forward, irrespective of what anyone else argues, least of all those actually doing the job at the sharp end. But then that is civil servants for you. isn't it? No commercial experience or acumen, yet arrogantly convinced they know what is best for everyone else.
WDS Independent Financial Advisers,