I was recently at a conference in London and was chatting to an IFA with Towry Law.
He was explaining to me how, from January 1 this year, all advisers in the national firm had been told to no longer work on an initial commission basis but instead on a percentage of assets under advice which, I believe, is around 1 per cent.
This is obviously a major change in his working practices and he was looking forward to it but also had concerns, particularly in the short term.
I very much hope that Towry Law’s move is successful. If a national IFA can move to ongoing servicing commission/fees and away from the sales culture of the past, then the pressure will be on other nationals, networks and small IFAs to do likewise. This will improve the professionalism of the adviser community and strengthen our own business models.
The only real losers I can see are the life offices, whose never-ending mantras of “7 per cent commission in investment bonds” and “We still believe in with-profits” will be dismissed out of hand by IFAs working on true wealth management programmes, including asset allocation, fund selection, tax wrappers and the like, using platforms and wraps. The end of old-style financial advice is now within sight.
Christopher Charles Financial Services,