IFAs could be shooting themselves in the foot with demands for ever higher
commission, claims Andersen Consulting.
The claims come as IFA network Countrywide and national IFA Towry Law are
demanding that life offices pay them more commission.
Countrywide's owner Misys is also believed to be flexing its collective
muscle after bringing together four networks to hammer out a future
business strategy with providers.
Andersen Consulting believes such demands could be pushing life offices
too far. It points out that the onset of stakeholder-style charging
structures on many products, not just pensions, mean commission is likely
to fall in the long term.
This is already placing many life offices under financial pressure as such
products will only prove profitable over eight years or more, reducing
providers' earning potential.
Andersen believes that pushing life offices closer to the bone on
commission could backfire, leading offices to seek other forms of
distribution. Such a scenario has already happened, with CGNU linking up
Andersen Consulting associate partner Melanie Kneale says: “This is very
short termism and IFAs must think about how they do business in future and
where they add value.”
Informed Choice man- aging director Nick Bam- ford says: “There is a
danger that public perception will be that IFAs are commiss- ion-hungry and
are more concerned with high commission than recommending the right
Broker Talkback, p28