Towry Law chief executive Andrew Fisher’s comments on the evils of trail commission have certainly caused a stir.
Speaking to Money Marketing earlier this week, Fisher said it is wrong for advisers to receive trail commission as part of an ongoing servicing agreement between the adviser and client.
Never shy of an opinion, Fisher believes trail commission is simply up-front commission paid over time and should not be linked to ongoing service levels. He says trail commission is designed to incentivise advisers to keep the client in a product, regardless of whether this is in their best interests.
His comments follow on from his previous admission that his firm receives around £6m a year in trail commission from orphan clients the firm no longer services.
Taking this admission first, what has stuck in the throats of many advisers is the fact that Fisher has spent so much of his time denouncing commission-based IFAs in both the trade and consumer press.
IFA-bashing seems to have become a deliberate PR strategy of Towry as it attempts to increase its exposure in the consumer media.
Fisher might see himself as a White Knight in his crusade for fee-only advice but some of his attacks on hard working advisers who strive to provide a top-quality service to their clients have done great damage to the sector and the way consumers perceive IFAs.
Regarding his latest views on trail commission, we disagree with Fisher that advisers taking trail commission as part of an ongoing service agreement between themselves and the client are not treating their customers fairly.
The trail commission paid to advisers allows them to service clients properly by funding regular meetings and reviews to ensure their changing needs are being met.
To suggest the payment of trail commission incentivises advisers to keep their clients in certain products seems to ignore the fact that the adviser will still be paid trail commission by the new provider if the funds are switched – with many advisers rebating any up-front commission received as part of this transaction.
Money Marketing wishes Towry Law all the best in its quest to become one of the UK’s top wealth managers. But might we suggest this would be better achieved by concentrating on its own strengths rather than attacking the majority of advisers who work tirelessly in their clients’ best interests no matter how they are remunerated.