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Map out the way on trail

With its decision to axe trail for many advisers Clerical Medical has certainly sent shockwaves through the market. It remains to be seen whether advisers send those shockwaves back.

Clerical has written to investors in funds recommended by an IFA, asking if they were still using an adviser. For those investors who said they were not, Clerical then cancelled the trail, informing advisers by letter.

The whole debate about commission is one fraught with perils, prejudice and fear.

The market has behaved as if commission is mostly a matter for advisers and providers to decide between themselves.

The FSA would clearly like the market to think differently and have the amount paid to an adviser decided in discussions between client and adviser.

Clerical, in the eyes of many advisers, is either breaching an implicit contract or at the very least jumping the gun. The company might suggest that it is simply leading the way to a brave new world of customeragreed remuneration.

We feel the market needs to move on this together, not in isolation, and we mean distrib-ution and providers working together. Perhaps the advisers should have been given the chance to convince their clients the relationship was “active”.

We also believe trail needs to be a significant component of a move away from big up-front commission to a more sustain-able advice landscape and moves of this kind should be made carefully. We ask exactly what part of the advice process the trail is paying for. Does it, for example, pay for clients who may have a query, an inquiry or at some time in the future want a switch?

Does any part of the trail payment go towards the adviser’s regulatory fees or PI in the event of a future complaint? What if the client remembers they have an adviser in future?

How much servicing of the client is Clerical going to offer now that the trail is cancelled?

These are, we feel, relevant questions. But we also warn advisers to heed of what has happened and make sure they have arguments ready to justify the retention of trail.

Simply arguing that it is theirs by right may not be sufficient, given the direction the regulatory wind is blowing.


Soft focus

We hear much these days about compliance responsibilities, the need for constant documentation, record-keeping, transparency and so on, but we should not forget that the core of adviser/client interaction is about building a relationship. This is what training experts often refer to as soft skills and relationship selling – the building of trust, the understanding of client needs and using that information to advise and recommend the best solution. The client buys, rather than being sold, an appropriate product.

Milburn marketing role at Munich Re

Andy Milburn has joined Munich Re as head of marketing for its UK life branch business. He was at Progress from Royal Liver until April when he became head of marketing at Goldsmith Williams.


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