Are we the only industry in the UK where the customers set the profit we can make? Any other business is not required to tell the customer how much money they make on selling 2lb of peas, an electric drill or even a car?
On first view, the new Menu starts by suggesting that the document should be used by the consumer to "shop around to decide which firms to use". Perhaps if the FSA supplied a sharp knife we could cut our own throats at the same time !
I bet the "Billy back bedroom" advisers will be rubbing their hands. What is the point of working from accessible offices with comfortable fittings when if you work from home you don't have this overhead and can reduce the commission earned. This will “massively improve” the perceived professionalism of the industry.
On the commission menu - where is the part that says that if the consumer decides to stop contributing to the pension for instance, after say six months, their would be a financial penalty to the consumer, (bid offer spread, penalty transfer). The adviser would be required to repay the "huge" commission paid out, so the only person effectively suffering is the adviser again. Doesn’t the FSA know how products work now!
If you buy a car and don't like it after six months, you lose money when you sell it, but the garage or the salesman do not have to give back any of the profit / commission initially earned.
Presumably the FSA will also allow the adviser practice to disclose the "market average" cost of their office, support staff, research facilities, PI Insurance and FSA Fees (and the cost of their Final Salary pension) to potential customers - as part of the menu format - to see where the "profit" we are allowed to keep has to be spent.
When will the FSA realise that it is value for money that is important, and not the immediate cost of a product? It might be cheaper elsewhere, but is it good value, and what support is available when there is no retained profit available to provide said support and ongoing advice. The consumer will ultimately know the cost of everything but the value of nothing.
It seems to me that the FSA want to do away with the concept of commission altogether. I personally look forward to the day when this happens and we are funded via the government to provide this service which everyone thinks is free and which the FSA resent us earning enough to improve our living standards, like, for instance, civil servants. Perhaps we would also have their benefit packages too but somehow I doubt it.
Would the last financial adviser in the industry please turn off the light…
Name and address supplied to IFAonline
DB and a lack of alignment
Encouraging better use of tech
Win one of three £20 Amazon vouchers
Vanguard's multi-asset range