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Warning as IFAs push for more commission

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&#39s 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&#39 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

with NatWest.

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

product.”

Broker Talkback, p28

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