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The Money Marketing Podcast: Could commission make a comeback?

The Treasury’s Financial Advice Market Review is set to transform the advice industry.

Earlier this month Money Marketing revealed how the review’s expert panel may recommend reintroducing some form of commission to help fill the advice gap.

In this week’s podcast, Old Mutual Wealth’s Carlton Hood argues in favour of providers paying some of the cost of advice, while Fairer Finance’s James Daley warns against turning the clock back.

Introducing a new “initial” tier of advice with a lower regulatory burden is also discussed.


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Corbyn takes aim at ‘rip-off’ private pensions

Jeremy Corbyn says a Labour government would embark on “fundamental reform” to address the needs of “the real middle Britain”, including tackling “rip-off private pensions”. Writing in the Observer, Corbyn said the party will focus on middle and lower-income voters to develop an alternative to the Tories’ “insecure and credit-fuelled economy”. He says Labour will […]

Introducing Trevor Greetham

Ryan Medlock, Investment Proposition Manager, Royal London Royal London Asset Management’s (RLAM) new head of multi-asset is officially up and running. I want to look at what expertise Trevor brings to the table and how this affects the Governed Portfolios (GPs) and Governed Retirement Income Portfolios (GRIPs). Trevor Greetham joined RLAM in April 2015 from […]


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There is one comment at the moment, we would love to hear your opinion too.

  1. Trevor Harrington 21st January 2016 at 1:39 pm

    One of the biggest problems with commission was the variable amounts paid by different products, thus engendering the thought that a salesman might sell one product with a higher commission, in preference to another.

    Another problem with commission was that it was used on indemnity terms, meaning that the client, suffered a deduction of value if/when he decided to cease the contract some years later.

    The third problem with commission was that the adviser’s company usually kept the renewal or ongoing commission amounts for themselves, and certainly did not allow it to be passed onto an adviser who was working with the client even if that adviser was within their own company, and certainly not to another adviser who was working outside of their own company.

    The result of the three above issues was that there was little or no motivation for the adviser to stay in touch with the client and see them regularly over the years ahead, unless they thought it likely that they might be able to sell another product, very possibly in replacement for the original one, and earn all over again.

    The solution :-
    1) Maximise the commission at perhaps 3% of the investment premium, to be paid only when the premium is paid by the client (no indemnity terms).
    2) Maximise the ongoing renewal / trail at perhaps 0.5%pa of funds accumulated under management.
    3) Make it compulsory that the adviser actually dealing with the client must have at least 50% of the above figures credited to him/her.
    4) Make it compulsory that the client can change his adviser at will, and redirect the above commission figures to his/her new adviser.

    I built a company on these principals from 1990 through to 2008 – culminating in eight established advisers, and four oncoming advisers, across three in-house branches – it was very successful. Advisers were highly motivated by these principals to secure clients, retain clients, and see clients regularly through an automatic recall system, They retained the clients with their existing products, and built their renewal/trail stream over several years. They secured over 50% to 65% of their personal salaries through renewal/trail, and they worked with up to 250 / 300 clients each. The established adviser salaries varied between £50,000pa and £150,000pa. We had no complaints from clients over 18 years. The business was eventually sold with over £400,000 per year renewal/trail.

    sorry … what was the question again ?
    One of the biggest problems with commission was the variable amounts paid by different products, thus engendering the thought that a salesman might sell one product with a higher commission, in preference to another.

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