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Why CAR will stall

The reason is that if the adviser operates on a commission basis, there is no remuneration to agree upon unless the customer purchases a commission-paying product through the adviser.

Thus, the process just becomes commission by another name with the amount being decided between adviser and client as opposed to product provider and adviser.

Customer-agreed remun-eration, where the adviser operates on a commission basis, has two major flaws:

l As in Julian Stevens’ case, the client can try and rene-gotiate the remuneration the adviser receives after the advice has already been given. If this should happen, the adviser is not in a strong position because the client already has the information they need to know and can go direct to the product provider or a discount broker and purchase the product on better terms than through the adviser.

l Greedy advisers could use consumers’ lack of financial awareness to add levels of remuneration far above that which they would have received from a provider under the old system, with no real justification forthe additional payments.

The only system that stands a chance of working fairly from the perspective of both consumer and adviser is where the adviser outlines the costs to the consumer of receiving advice from the outset.

The consumer can then decide whether they wantto proceed on this basis and, if so, sign an agreement stating that they will pay for the advice, irrespective of whether a product is purchased or not. One ofthe options of paying the fee would be to build it intothe charging structure of any product purchased if the consumer so wishes.

Tyrone Murphy


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Value judgement

I was intrigued by Allan Rosengren’s comments in Money Marketing on January 17 and wanted to add my support to the views expressed in terms of elevated multiple purchases.

Value remains within European equities

By Rob Burnett, Neptune European Opportunities Fund

In recent months, investors have become more pessimistic about both the European and the US economic outlook and yet stockmarkets have pushed on to new highs. Some would argue that this is a worrying divergence. We would take the opposite view. This appears to be classic bull market behaviour. A wall of worry has been rebuilt, and stockmarket resilience should be taken as a sign of strength. The market is discounting an improving economic outlook ahead, particularly in the south of Europe.


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