I read with interest the article reassuring IFAs that there is no commission crisis.I happen to agree with the present assessment, however, I would still urge IFAs to reduce any dependence on initial commission as soon as possible. The polly put the kettle on assessment certainly highlights a risk to advisers, which is essentially beyond their control. Product providers will eventually reassess how they acquire new business and what they are prepared to pay for it. In my opinion, it is only a debate about the timing. The wise, who agree with this view, will have started to reduce their dependence on initial commission from product providers. My advice to IFAs is to make a plan to change their business, on their timetable, and in advance of any sudden change imposed by the product providers. Burns-Anderson advocates a number of practical changes that IFAs can make to reduce the dependence on initial income. Two main options are: increase the number of services where a fee may be charged; and build renewal income, perhaps by managing clients’ funds on a platform. At Burns-Anderson, we have seen a marked increase in fee income over the first half of this year. The majority of the increase has come from advisers reviewing their services and ensuring a fair remuneration is charged for the services provided. There has been an increase in fees offset by commission and more fee and commission options for clients. Fee options offset by commission are a useful way to emph- asise independence and protect new business income even when product providers reduce initial commission payments. There has been much debated about the benefits of Wrap this year and I have been leading Burns-Anderson’s assessment of the benefits to our members. Most relevant to the issue raised here is the separation of adviser remuneration from a transaction. Advisers moving towards a client service model need to ensure they can agree their remuneration for the service with the client and not be beholden to the commission paid by the product provider, fund manager, or platform. Certainly, managing funds of a platform and generating fund-based income reduces the need to write new business. However, advisers need to plan for this change. The plan must have defined goals and a realistic timetable because it would be foolhardy to reduce your dependence on initial commission too quickly, and that brings me back to the highlighted risk.
Regulatory services associate director,