Proposition manager Sham-inder Gill says as advisers move to fee-based models or adviser-charging, networks need to examine how they collect fees.
He says: “It is likely that networks will have to look at new avenues for revenue when adv-iser-charging comes in. Currently, commission comes in centrally to the network, the network takes out its fees, then pays that commission to advisers. When commission is gone, fees can be paid directly to advisers without the network having any kind of central reconciliation.”
Gills says some networks are considering adopting a wrap as a way of collecting fees after the RDR. But he points out that there are issues for networks in how to ensure all advisers place business on the one wrap and whether that would be treating customers fairly. He says: “The bigger advice firms which are part of a network may feel it is in their best interest to source a wrap for themselves.”
A Sesame Bankhall Group spokesman says: “The majority of our business is going to be unaffected because the move to adviser-charging predominantly has an impact on regular-premium investments. Single-premium investments, mortgages, protection and general insurance will not be affected in the same way.”