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Ivan Massow ‘regrets’ 100% trail retention claim

Ivan Massow says he “regrets terribly” telling clients he would keep 100 per cent of trail following the demise of his trail commission return business Paymemy.com/mission.

Speaking to the BBC’s Money Box programme at the weekend, Massow again cited escalating professional indemnity costs as the reason for the service’s closure, but also admitted the business did not secure enough clients.

Presenter Paul Lewis asked what now happens to Massow’s former clients, and questioned an initial email sent to clients announcing the closure which said the firm would keep 100 per cent of future trail if clients do not move to another adviser.

Massow told the programme: “I regret that wording terribly now. I wanted to enforce the urgency, and the reality that the business was going to close. I will not keep 100 per cent, I will not keep any of it, it will just get lost in the mire of a closing business. That letter has been superceded now. A company called Club Finance has very happily come and negotiated with us to take over our client bank. They already do commission rebates, and so they will effectively be stepping into our shoes.”

He also admitted that Club Finance will be taking a higher fee than Massow did to provide the commission rebate service. Club Finance will return 75 per cent of a client’s trail, and retain 25 per cent, while Massow’s service charged 20 per cent.

Massow said: “They take a 25 per cent fee, that is what they feel they need to do to survive. Clients do not have to go to them, they can find someone else that offers a similar service to us. We have been careful not to allow this to affect clients. We have rebated all the fees that we took from them, and I think we have behaved honourably.”

Lewis noted many advisers were unlikely to agree with this statement, and pointed to online comments on Money Marketing showing “the depth of hostility and anger towards Ivan Massow and his business.”

Essential IFA managing director Peter Herd also appeared on the programme, saying clients needed to focus not just on what they are being charged, but the level of service they are getting for those charges. Lewis argued Massow would not have attracted the clients he did if those people felt they were getting a service they valued.

Herd said: “Some clients are service hungry and want regular annual reviews, and there are others who would rather come in once every two years. It depends on the clients’ needs. My message to those clients who are being moved to Club Finance is to think about what they are paying for, and if this is adequate for their needs. If not, I would encourage them to seek out a decent IFA.”

Another adviser, Simon Kershaw, also contacted Money Box. He emailed the programme saying he had been an IFA for 18 years, and had “never knowingly lost a good client, even to ’commission-harvesting’ ventures such as Mr Massow’s.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. I think the whole concept is a joke, why should any middle man take any part of the rebate. 100% of the rebate should go to the client.

    Rebates are designed to cover the cost of advice, so if no advice is being received then why should any business benefit from it. I only wish clean share classes would replace them sooner rather than later!

  2. Does he regret what he said or regret getting caught?

  3. I wish someone could or would put some numbers on this, as I am not sure that it is as significant as is being portrayed.

    If we are talking about the old style of policy renewal commission then this is not enough, in many cases, on a policy by policy basis, to put the fuel in a car’s petrol tank.

    If we are talking about pre-agreed commission shapes (ie. initial commission sacrificing in favour of ongoing remuneration), such as were commonplace in the years leading up to RDR, then that is a whole different kettle of fish and not transferrable from a regulated agent anyway.

    So what exactly is all of this please?!

  4. Incompetent regulators 2nd September 2013 at 10:12 am

    Once again the bbc shouldn’t be giving this man a second airing at the tax payers expense.

  5. To clarify the above comment, I have not included collective investments in the argument, as I am not sure that this ‘debate’ relates to this area, more so pensions and life investments.

    On-going commission on collectives is different again, as the 0.5% is a servicing factor, but I don’t think that there is any debate about that within this industry and there are certainly many active avenues that people can already pursue as to sharing or negating this cost to their investment, if they do not require on-going service.

  6. Is that an FCA investigation I see on the horizon ?

  7. I think Paul Lewis realised he and his program had made a mistake the first time they gave Massows business free publicity, and though I’ve not heard this latest program, it sounds like he gave the topic a fairer viewpoint this time around.

    What Lewis (P, and M) and other journalists need to do now is understand that RDR means this sort of circumstance relates only to past business – for anything done after 1.1.13, the client is free to turn off ongoing adviser payments should they so wish. Equally, the FCA should make it clear how and when an advisers responsibilities end if that occurs.

  8. Anonymous ‘IFA’ 2/9/13 11:02 is wrong. Neither I nor Money Box made a mistake in our broadcast on 2 September 2011. As for the recentMoney Box interview, probably best to listen to it before commenting. And next time, say who you are! Paul Lewis.

  9. Hi Paul, great to see you are reading these articles. Any constructive thoughts on my comments, or numbers to add?

  10. I have been a client of Massow’s for over a year and have not recieved a penny yet! When I try to contact them I never get a straight answer. I have been told now that they are awaiting an audit (strange how this was also the case at the end of last year too!).

    The portfolio on Massow’s web site just says commission being recieved. My latest investment statements mention nothing about rebates that may have been recieved. Something smells very bad indeed…

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