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Guide aims to teach investors rebate game

Investors do not realise that they can have a say over how commission is allocated, according to a free guide from Investor Connections.

Managing director Matthew Morris says investors begrudge paying commission of 7.5 per cent on investment bonds but few realise they reach an agreement with an adviser.

The guide, The Generosity of Insurance Companies, explains how to differentiate commission from the initial charge on an investment bond and sets out how insurance companies calculate commission.

Under current regulations, the adviser has to consult the investor on how commission is treated and must get their authority to proceed with an arrangement. Morris says: “It is a highly competitive market for insurance companies and they are keen to offer incentives for consumers to invest so there are clearly benefits to be gai- ned by the investor who understands how to play the comm-ission game.

“We find that potential investors often do a simple calculation and think they are going to have to pay out 7,500 worth of commission if they invest 100,000 through an adviser. Not surprisingly, they see that as a lot of money for not a great deal of work and do not realise that they can negotiate how the money is treated and effectively retain it for themselves.”

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