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Up-front renewal plan is an alternative to investing in IFA firms

Product providers could pump money into IFAs by buying their renewal commission in advance as an alternative to investing in them directly, a leading consultancy has proposed.

The plan would see IFAs exchange the right to future trail commission for cash up front as a solution to the funding crisis in the industry caused by the commission squeeze.

While product providers such as Norwich Union, Aegon and Clerical Medical are considering investing in IFAs, the proposal, put forward by Cap Gemini Ernst & Young, would see providers increase capitalisation of IFAs without falling foul of the FSA&#39s “better than best” rule. It could also allow IFAs to remain independent.

Speaking at the Money Marketing IFA UK conference in London last week, CGEY executive consultant Joanna Hall said: “IFAs could get financial support from product providers by passing over the capital value of future renewals. Not all IFAs want to be owned by product providers and the FSA is not happy with direct ownership.”

RJ Temple communications manager Liz Walkington says: “That money will get spent investing in systems and business development, but I am not sure that you can increase revenue to match the loss of renewal income. Renewal commission is all about building value in your business. How will IFAs survive in the future?”


Virgin launches into credit card market

Virgin Money has announced it is breaking into the £84bn credit card market with the launch of Virgin Card in early 2002.The card will be launched in partnership with MBNA Europe Bank, and will introduce a rewards scheme bringing the main elements of the Virgin Group under one roof.Virgin chairman Richard Branson says: “The UK […]

&#39Govt message on stakeholder getting through&#39

Stakeholder awareness among the public is inc-reasing, showing that the Government&#39s publicity campaign is working, acc-ording to research from Legal & General.Its research shows that 66 per cent of people have heard of stakeholder compared with 47 per cent in May.L&G also asked consumers which features of stakeholder they were aware of. Half said they […]

Access routes

Lorna Bourke&#39s article (Money Marketing, November 22) makes some excellent points about the need to give people access to advice to help them make financial decisions which can have a very big effect on their lives.The so-called 1 per cent world has been a factor, albeit not the only one, in the withdrawal of many […]

Baillie Gifford – Investment Grade Bond Fund

Friday, December 7, 2001.Type: Oeic.Aim: Income by investing in investment grade fixed-interestsecurities.Minimum investment: Lump sum £1,000.Investment split: 100 per cent in investment grade fixed-interestsecurities.Yield: 5.5 per cent.Isa link: No.Pep transfers: No.Charges: Initial 3.5 per cent, annual 1 per cent.Commission: Initial 3 per cent, renewal 0.5 per cent.Tel: 0800 9174752.


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