View more on these topics

What about effect on the customers?

I see Ron Sandler has been joined by the Eurocrats at the Brussels Inquisition. Both seem ready to run a sword through any adviser paid by commission. However, the potential impact on the consumer would seem to have been overlooked.

I am a self-employed IFA with a client bank of around 250 and growing. I work on a commission basis only. Around 40 of my clients are in what I would call the high-net-worth bracket. Let us call them the Mr and Mrs Topnotches.

Over the years, the occasional Topnotch has raised the issue of fees. I explain that I do not work on that basis but I offer to provide them with my analysis and report so they can assess the quality of my advice. If they are not happy with my work, I explain I will be happy to refer them to a colleague who will work on a fee basis.

None has yet taken up my offer after seeing the quality of my work. All are happy for me to get commission and none has questioned the impartiality of my advice or my integrity.

I am also happy to give advice to Mr and Mrs Average-folk. Now, the Averagefolk tend to be rather mistrusting of financial advisers because they read the Sun, the Mirror, and the posher ones read the Mail.

Fortunately, the Averagefolk I meet will probably have already been sold on the idea of meeting with me by a colleague from our will-writing or legal services department so they will be receptive. After gaining their trust and discussing their needs, I may conduct some business with them. I may rebroke the expensive life cover that the building society sold them when they took out a mortgage five years ago, saving them a few pounds each month. I might set up a small savings plan or pension. It is usually small case business but there are a lot more Averagefolk than there are Topnotches so I still earn a good living.

To Mr and Mrs Averagefolk, I am probably less of an adviser and more of a salesman as, in most cases, they need to be educated and motivated to buy financial products.

The issue of my charging a fee to these clients has never been raised. Why? Because they would not be able to afford it. They are happy for me to be remunerated by commission So, there they are – the Topnotches, who could afford to pay fees but choose not to, and the Averagefolk, who cannot afford to pay fees. Not exactly a stunning case for the abolition of commission, is it?

But what would become of them if Mr Sandler and the Eurocrats just go ahead and ban commission payments?

Well, most of the Topnotches would probably pay up but I think I might see an increase in clients who decide they do not really need a full annual review.

The Averagefolk would have few options. Some might see a “salaried” rep and buy a rather expensive policy. Some might trust their bank. One or two might buy on the internet.

But the vast majority of the Averagefolk would do nothing. They would not buy any financial products. Well, that&#39s no problem, is it? Not until people start to retire with no pension income or they get old and sick with no private health or long-term care cover or they die without life cover.

Nick Plumb

Legacies Asset Management,

Brentwood, Essex.


&#39E-commerce emphasis will shift to IFAs&#39

Life companies&#39-commerce strategies have failed to deliver, forcing a change of direction that will see insurers targeting IFAs rather than con- sumers, according to a major report published today. The report, by management and IT consultants Cap Gemini Ernst & Young, reveals product providers will have to focus resources on driving IFAs towards their online […]

Almeida Capital appoints new chairman

Financial research and information provider Almeida Capital is appointing Mitch Cybulski as chairman. Cybulski was previously chairman of SmithKline Beecham International.Almeida Capital chief executive Richard Sachar says: “We are absolutely delighted that someone of Mitch&#39s calibre and experience has joined our firm.”

Zurich in Deutsche Bank talks but will keep Threadneedle

Zurich has said that Threadneedle — its UK asset management arm — will remain part of the group desdpite confirming plans to sell the rest of its asset management businesses, its Zurich Scudder Investment arm, to Deutsche Bank.Zurich may also acquire several insurance subsidiaries of Deutsche Bank as part of the deal.

Investment firms suspend trading following attack

Tens of UK investment firms have suspended trading across their entire fund ranges, following the terrorist attacks in the US on Tuesday.Fidelity’s FundsNetwork said it was suspending trading on its platform until US markets reopened. While Cofunds said it would continue to trade a limited number of funds.IFAs are advised to contact firms individually to […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm