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Commission – simple realities, practical solutions

So the next witch-hunt is to be on commission levels on personal investment business, including unit trusts and investment trusts.

But why? Ninety-nine per cent of unit trusts and investment trusts pay a straight 3 per cent initial commission,so where is the scope for commission bias in that?

Investment bonds are different, of course, and commission levels do vary. OK – why not just cap the commission at 4 per cent initial (reflecting the fact that they are more complicated products than unit trusts) with 0.5 per cent a year trail? Why should any review, as if one were needed, be any more complicated than that?

Occasionally, clients raise with us the issue of different commission levels between different investment bond providers. I tell them that higher available commission can be to their advantage because we (almost) always rebate everything in excess of 4 per cent to enhance the client&#39s investment. This is excellent for business because, as we all know, clients love a special deal.

But the Treasury seems unable to grasp such simple realities and practical solutions, preferring instead the lengthiest, most costly and most complicated strategy to tackle anything at all, in the typical fashion of civil servants on index-linked pay scales paid for by the rest of us. And who is this Myners fellow anyway?

Julian Stevens

Partner, WDS Independent Financial Advisers, Bristol


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