Former IFA Ivan Massow insists good advisers have nothing to fear from his new business, which encourages clients to switch to his firm in exchange for 80 per cent of trail commission.
The firm will keep the other 20 per cent. Massow’s plans received a large amount of criticism from IFAs on the Money Marketing website. He stresses he is only targeting clients who are not receiving ongoing advice and are likely to be orphaned after the RDR.
The firm will not offer advice but can refer individuals who want advice to other firms. Massow’s website, paymemy.com, states that trail commission can reach up to 1.5 per cent of the value of annual investments.
One client testimonial states: “I always wondered why my IFA sent me a hamper at Christmas – turns out he was skimming over £5,000 a year from my pension fund.”
Massow says: “We are not targeting the IFA community. We are specifically concentrating on the millions of people that are going to be orphaned without an IFA as a result of the RDR.
“Many clients have already been orphaned. I do not think any quality IFA who has an ongoing relationship with their client has anything to worry about.”
He admits that while the figures quoted on the firm’s website are high, there are “rare but not uncommon” instances where trail commission could reach 1.5 per cent such as on offshore investment bonds.
Massow says the payments back to clients do not constitute an unauthorised payment, which would generate a tax liability. He says this has been confirmed by HM Revenue & Customs.
Evolve Financial Planning director Jason Witcombe says: “Consumers have a right to know what they are paying in trail commission and should expect to be receiving an ongoing service for that.”
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