Paying commission encour-ages nomadic adviser behaviour and hinders business sustainability, says Tenet chief executive Simon Hudson.
He told a Money Marketing RDR round table that sustainable business models are only possible if advisers build regular income streams based onhighly qualified teams of specialist or generalist advisers under a firm’s umbrella status.
Hudson said client relationships should be with the firm, not the adviser, and wants to see advisers working as collectives.
He said: “You will not get sustainable models while you have commission-orientated structures because you encourage nomadic tendencies. What we need is a sustainable environment, with a career path and regular income streams, and you need clients to relate more to the firm than the adviser.”
Bankhall chief executive Peter Mann said those in charge of adviser firms will see the benefits of moving to a passive income stream but advisers working for them may feel no loyalty.
Hudson would like to see advisers specialise or generalise, with clients forging a relationship with the firm.
He said: “Big distributors have been able to force the hand of providers to pay them more money to attract the same people but what do they care? It is the same advisory group going round in circles, it does not matter what firm they are in, so there is no loyalty at provider end or adviser end. You have got principals trying to build sustainable businesses with two forces working against it.”