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Ivan Massow targets IFAs’ trail with new launch

Former IFA Ivan Massow has launched a new proposition which pledges to return the majority of trail commission clients are paying if they switch from their current adviser.

Massow’s says it will return 80 per cent of the trail commission and keep 20 per cent itself and is targeting clients who are not receiving any ongoing advice.

According to an article in the Independent, the firm will not be offering advice itself but has set up referral arrangements for individuals requiring advice. The firm’s website provides a function for individuals to be put in touch with an IFA.

Speaking to the Independent, Massow says: “The first priority of our advertising campaign is going to be education. Most people simply don’t know they’re paying these fees – not a single person I’ve asked knew of their existence.”

On its website, the firm says: “You probably haven’t heard of ’trail commissions’, but up to 1.5 per cent of the value of your investments each year could be paid out to your Independent Financial Adviser  as commission. We will find this commission and pay 80 per cent of the full amount back to you. This means that on a typical pension we would send you more than £60,000 over the term of the policy.”

“Your policies remain unchanged, and you don’t need to contact your existing IFA. We only take our 20 per cent fees from commission we successfully pass on to you. If we’re unable to track down the commission, it will not cost you a penny.”

The firm calculates its £60,000 “typical pension” figure based on a pension fund of £100,000 with trail commission payable over 30 years

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Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. What a muppet!

    He’s forgotten that it is ILLEGAL to pass on pension commissions as cash back to clients as this will be an UNAUTHORISED PAYMENT resulting in withdrawal of approval. Who’s going to fund the client’s tax bill Ivan? You? Don’t think so.

  2. One issue Mr Massow might have overlooked in his example is the unauthorised pension payment charge for clients under 55 benfitting from their pension.

  3. Brilliant! Another failed IFA trying to make a quick buck.

    If he was successful enough with his own business he wouldn’t need to captalise this little scheme.

  4. Interesting that he quotes up to 1.5% of your investments could be paid to your advisor when the reality is that most are probably working on 0.5 – 1%. It grabes the headlines!

    What will he do sweep up all these clients, give no advice for the 20% and then sell the business like everything else he has been involved with.

    Another get rich scheme for himself which has little concern for the client.

  5. There`s no R in Tail.

  6. I hope this type of thing isn’t going to be feature of the post RDR landscape. The scheme appears to be illegal, unprofessional and sensationalist. Hopefully the FSA will act swiftly.

  7. On the subject of rebating commision on pensions this may be allowed. Please refer to RPSM 09106040 which was an update issued by HMRC on the 4th october 2010 (all 192 pages of it). If you google RPSM 09106040 it wioll take you to the page.

  8. What does Ivan intend to do when he refers a client to an IFA when they want more advice?
    The IFA might then build in trail for ongoing advice, does Ivan keep his 20% or does the IFA who will be providing the service keep it as should be the case.
    This beggars belief that he thinks he can get away with this ambulance chasing scheme!!

  9. If commission is “cost of advice”, then rebating what was already agreed as earnings for a third party must count as an unauthorised payment. But if commission is a cost paid by the product provider for marketing,distributing and maintaining the product, then to cut costs for maintaining the product would not be an unauthorised payment. It all depends on how “commission” is defined.

  10. What a great idea thank you Ivan you will save me the time & expense of weeding out the policy holders from my client bank leaving me more time to invest in my true clients who value my service.

    This is just another business model which looks attractive in the ever changing landscape of commerce. It is just another iteration of the HL model which will suit people who do not value our input and feel that they can do just as good a job themselves.
    I know this will mean a loss of income stream in the short term but do not think that you legacy trail income will fall off a cliff. it will take several years before this has much impact and hey if Massow offers 80% if you can do it profitably without business risk offer 85% and then see what happens.

    This is a time of great change for us all and the main thing we need to focus on is running a profitable business where client/policy holders get what they pay for & we get paid for what we do.

    Interesting times as the Chinese would say

  11. Good idea Mr M – consumers buy differences, not sameness. One thing though:-

    “This means that on a typical pension we would send you more than £60,000 over the term of the policy”. I do not believe that as the average (i.e. typical) pension fund is about 30K (?). And as this will be built up over a working life of say 40 years his numbers are way off.

    Time for a referral to the ASA methinks.

  12. SEEMS LIKE SOMEONE IS NOT DOING THEIR HOMEWORK….THIS IS FROM HIS WEBSITE* Based on a pension fund of £100,000 with a trail commission payable to a client over 30 years (ie a 35 year old retiring at 65) the total amount would be £67,041 (gross is £83,801) . This calculation assumes a fund of £100,000 at outset (age 35) which grows by 6% per annum compound year on year. The commission is calculated on this value at the end of each year and the 6% growth rate is after all policy charges and actual commission deductions.
    6% PLUS AMC PLUS THE “TRAIL” OF WHAT HE SAYS IS 1.5% AND THAT MEANS HE IS ASSUMING A GROSS RETURN OF AT LEAST 9% FOR 30 YEARS APPARENTLY WITH A FUND WHICH RECEIVES NO INPUT FROM PROFESSIONAL FUND MANAGERS!
    WHAT PLANET IS THIS MAN ON?
    AND JUST HOW MANY 35 YEAR OLDS HAVE A PENSION FUND OF £100,000.
    YOU MAY HAVE TO RETHINK YOUR STRATEGY IVAN, BUT IT WONT BE THE FIRST TIME YOU HAVE BEEN BACKED INTO A CORNER.

  13. RE RPSM 09106040 – the wording states that rebate is allowed if the advisers has made a commercial profits after providing advice. Given that there is no advise in this structure I am sure HMRC will be more than happy to challenge those foolish enough to use this service. They would better advised to ask the company to repay the commission directly or even just find an adviser who will provide advice and then rebate the excess.

    Also what is that tax treatment of such payments, sure they are taxable, again I sure than HMRC would be more than happy to take their share.

  14. Why bother with this at all. After RDR clients will be able to contact providers and have the trail turned off if they feel they are not getting the ongoing advice they are paying. I think Martin Lewis will be telling the world this!!!!!!!!!!!!!!

  15. This concept is insulting to IFAs, and manages to infringe a fair few of the FSA Principles….not like Ivan then?!

  16. One hopes The FSA or other regulatory bodies looks at this closely as he claims he wants to educate the consumer but the examples he provides look to be rather misleading and are clearly designed to make it look like his service will give consumers a huge amount of money back into their pension.

    Personally I think when NEST comes into play and if it works and get the numbers needed it could put a lot of pressure on other pension providers to lower charges considerably to keep the funds under management.

  17. Ivan Massow – http://www.guardian.co.uk/money/2011/sep/02/fall-and-rise-ivan-massow

    I dont know how the FSA will grant him a license under the fit and proper rules to be honest?!

    Clawback King (Queen) or Consumer champion? only time can tell!

  18. http://www.telegraph.co.uk/finance/personalfinance/fameandfortune/7610827/Fame-and-Fortune-Ivan-Massow.html

    Ivan Massow interviewed:

    Do you think pensions are a good idea? If not, why not?

    IM: I’m not sure I believe in retiring. I’ve spoken to friends of my Mum who are at retirement age and I keep hearing them say they aren’t sure retirement was the best option for them – they have lost some purpose in life and that has aged them.

    Ivan is looking to cash in now on trail commission to fund his retirement – nice work if you can get it off the ground. Good luck chap!

  19. Is this parasite no good at advising?
    Perhaps thats why his last firm failed

  20. Listen to yourselves, I am pretty sure he would have spoken to HMRC before launching and this is all OK. Wake up and smell the coffee, IFA’s have had the good life for a long time and now our time is up. I for one have started along a new path and to be honest, not dealing with the FSA et al is the most refreshing change. After RDR the majority of IFA’s will the most qualified people in the dole.

  21. Isn’t this just an IFA being lazy? Surely the best advice would be to pay a one off fee and then transfer into a policy with no trail and lower charges – I assume this option will be put to the client??

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