View more on these topics

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

Recommended

Rock plans show UK taxpayers silver lining, says New Star

The nationalisation of Northern Rock could prove highly profitable for UK taxpayers, says New Star economist Simon Ward.He says this week’s plan could show taxpayers a silver lining, providing the Government can avoid making a significant compensation payment to equity and subordinated debt holders. Ward says in spite of guarantees by the Treasury, Northern Rock […]

Mott prepares for tea party in Alice in Wonderland market

PSigma income manager Bill Mott believes domestic stocks are set for a turn-round and current ratings represent a once-in-a-decade opportunity.The former Credit Suisse manager views a number of sectors as attractive and says the scaledown bears no comparison with the early 1990s.He says: “There are so many opportunities out there and unless there is an […]

Lehman Brothers confirms another 200 UK job cuts

Lehman Brothers has confirmed that it will be cutting a further 200 jobs across its UK mortgage capital business, affecting lenders SPML and Preferred.A spokeswoman for the bank would not comment further on the future of the two brands but says that it is continuing to offer mortgages under its brands.She says that Lehman Brother’s […]

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.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com