View more on these topics

Menu makes IFAs much cheaper than direct sales

IFAs are revealed to be up to four times cheaper than services offered by their direct-selling rivals in the FSA&#39s menu proposals.

Despite a fierce rearguard action fought by the banks and other direct operations, the FSA has decided to apply the menu to them as well as IFAs rather than opting for the proposal set out by the banks.

According to figures submitted to the FSA 18 months ago by a steering group comprising trade bodies and product providers as part of the original menu proposal, commission paid to IFAs can be up to four times less than the commission equivalence earned by direct salespeople.

One product provider admitted to the group that, on a stakeholder personal pension paying in a regular premium of £300 a month, it would pay initial commission of £300 to an IFA compared with £1,168 to its tied agent.

Another said under the same circumstances, it would pay an IFA £805 initially but pay a direct salesperson £2,340 up front.

The menu will mean that all advisers will have to tell consumers at the beginning of the advice process how much it will cost them, and those remunerated by commission will have to compare their rates with the market average.

Direct-selling operations will have to do the same and only they will have to reveal commission equivalence, which is defined as anything that providers would be prevented from giving to IFAs under the indirect benefit rules.

However, there are fears that the FSA may tilt the balance back in favour of tied operations when it carries out a review of the methodology of commission equivalence later in the year.

Aifa director general Paul Smee says: “The menu gives IFAs the means to show how competitive they are, it is up to them to compete.”

Informed Choice managing director Nick Bamford says: “If consumers have not realised before that independent financial advice is best, they are going to realise pretty damn sharpish with this.”


Providers can give tech cash

Product providers will be allowed to give direct support, including cash, to help IFAs with technology for their businesses. The rule change extends provision of reasonable indirect benefits to include information technology support. Providers will be able offer IFAs cash or help towards developing software or computer facilities. The provision will be at the FSA&#39s […]

Who is policing policy changes?

It was interesting to read in Product Matters about Norwich Union&#39s commitment to with-profits (Money Marketing, February 19). The strange thing is that it does not offer a with-profits contract any more. You can call a bed a chair because you can sit on it but the other way round it becomes a very restless […]

O&#39Leary to lead Marlborough Stirling

Software and services provider Marlborough Stirling is appointing Mike O&#39Leary as chief executive, leaving Huw Evans to revert to his previous role of chairman after holding the post since Graham Coxell stepped down a year ago. O&#39Leary was at Misys from 1996 to 2000, holding the role of chief executive of its financial services division […]

Product companies welcome clarification

Product providers believe the clarification of key issues of the menu will allow the industry to move forward. Norwich Union says it supports depolarisation but is concerned that investment rules will be extended to all intermediaries and that the same menu approach could be used across all forms of distribution. Clerical Medical is pleased that […]

Choose life…

Sarah Scott  – Marketing Consultant, Royal London  This month sees the return of Renton, Sickboy, Begbie and Spud in the sequel to the film Trainspotting. Just over 20 years later, we return to see exactly how life treated the characters whose lifestyle was less than ideal back in 1996. Did they choose a job, choose […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm