The traditional commission structure of the adviser market is evolving with IFAs opting for more varied ways of being paid, according to Skandia.
Figures from the firm’s latest pension series show 69% of advisers are opting for its fee deduction scheme over traditional commission.
In addition, 90% of those receive a combination of initial and ongoing servicing fees based on a percentage of the policy value.
A fee deduction agreement is where the adviser’s payment is agreed with the client in advance and deducted from the policy.
Skandia says the figures demonstrate the market for adviser remuneration is continuing to evolve in line with the changing nature of the financial advice market.
Billy Mackay, head of marketing at Skandia Life, says: “We are finding that increasingly, together with their clients, advisers are choosing to be remunerated in newer and more varied forms.
“Preferences in this area of the market are changing and at varying speeds, so we believe it is important to make sure a range of options are available to advisers.
“These figures support our belief that many advisers are happy to transition to fees and fee deduction options.
“Ultimately the objective is a clear agreement that both the adviser and client are happy with, so that the adviser receives fair remuneration for the service they provide and the client has a clear picture of how much the advice and on going service costs.”
Skandia says as advisers increasingly focus on individual investment solutions for clients, fee deduction agreements can ensure advisers are paid appropriately for the work they agree to undertake on behalf of each client.
It says the shift away from traditional product sales towards client specific investment solutions means advisers are undertaking specialist tasks such as risk analysis, asset allocation, fund selection and ongoing portfolio reviews.
Fee deduction agreements provide a transparent framework for the client and adviser to decide an appropriate combination of fees for this specialist work and this agreement is clearly documented and signed by the client, Skandia says.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Scott Sinclair on 020 7034 2636 or email [email protected]IFAonline
Despite improved risk appetite
FOS award limit increase
Relates to 136 million transaction reports
Ceremony will take place 13 November