There have been a handful of responses to today's editorial, looking at the market averages used on the depolarised commission menu.
Andy Jervis, director at Chesterton House Financial Services argues the issue is not to worry about the cost of the advice delivered but to ensure intermediaries can show why that advice is worth paying for.
”There is another way to look at the reason why advice from IFAs looks expensive - and that's because it is.
”Let's face it, common sense tells you that if you are buying a product with the help of an intermediary, there is going to be some additional cost for that service. Why try to pretend that isn't the case?
”The task for financial advisers is not to try to make themselves look cheaper, but to be prepared to justify why the consumer might benefit from employing them. If all that the adviser does is to sell financial products in response to client instructions, then they will inevitably find themselves involved in a debate with at least some of their clients about how the cost can be reduced by buying elsewhere, and the menu will speed up that process.
”If the adviser is genuinely that - an adviser - then it should become apparent to the client from the very first contact whether the service on offer is one that they are prepared to pay for. This argument applies whether or not fees are charged for services provided, indeed it is a nettle that must be grasped before contemplating introducing fees.
”If you believe that skilled advisers provide huge benefits for clients, then you shouldn't have too much difficulty persuading those clients that yours is a service worth paying extra for. Hasn't it always been that way?”
Clive Moore, IFA adds a benefit of the menu is could prevent commission-related problems of the past which suggests advisers earn 7% for 20 minutes work.
“It’s worth pointing out that when IFAs have been criticised in the past for selling lump sum investment contracts paying up-front commission of 7% or more, the defence has been that most IFAs rebate some of this to consumers and the actual level of commission taken is far lower. However, when this practice of rebating commission is shown to be less widespread than claimed, people moan that the menu must be wrong.
“When the attitude of major national “IFAs” is that “With Profit Bonds were great because they took 20 minutes to sell and paid 7.5% commission” it’s not surprising the sector suffers from its poor reputation – it’s well deserved!
“The commission menu is excellent news for IFAs who can demonstrate the value they deliver to their clients (even if they take 7% upfront commission). It may also have the added benefit of encouraging those advisers who think this level of commission is fair reward for 20 minutes work to seek alternative employment.”
Philip Melville, IFA at Argyle Financial Group, suggests it is perhaps the providers who will be most affected by the remuneration menu, rather than financial advisers.
”Your article about the Menu seems only to highlight the need for change in the IFA remuneration structure. Could it be that the loudest voices condeming the Menu rates are coming from providers trying to maintain their hold over their ‘distributors’.
“Until we break free from the influence of product providers and their needs and change our focus to the needs of our clients we will always be on the receiving end of negative press and over zealous regulation.
”Perhaps a more positive role could be played ( by those sections of the media who live off the back of the IFA community ) in assisting the change of mind set needed to become client focused advisers rather than distributors of product.”
Stephen Girling, director at SG Wealth Management in Norwich, suggests the ‘dinosaurs’ of the industry will have to accept things are changing.
”Having read your editorial with interest, I would suggest you should be careful as to how biased you are in coming down in favour of one route or another.
”The winds of change mean that the dinosaurs of the insurance industry are having to shift from where all their advice used to lead to the sale of an insurance company with-profits bond to earn 6 or 7% commission, irrespective of the amount invested, to now needing to justify their remuneration for the advice and service given.
“It is however still the case that, in many instances, the consumer is getting a raw deal through their chosen adviser.
”May the thinking of yourself and other dinosaurs soon evolve, or perhaps through regulation, soon die out all together.”
Due to leave 31 May
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