Switching from initial commission to renewal commission is IFAs' biggest priority to generate income over the next year, says Lincoln Financial Group.
A poll by the provider found 26% of IFAs surveyed rate switching the focus to renewal commission as their main priority. A further 20% say their priority is improving management information on client profitability while 13% say it is moving to fee-based advice.
The survey also shows 44% of IFAs see building long-term relationships as the biggest potential threat to their businesses over the next year. Almost 40% say their biggest threat is the need to keep up with product development.
Simon O’Connor, head of product and marketing at Lincoln Retirement Income, says: “Initial commission’s being increasing cut. There’s a need for ongoing advice for the consumer, which means that gives the adviser op to cross-sell and up-sell.
“Advisers know very well that they are in a long-term business where focusing on short-term success is unlikely to be a formula for success. The key to success is surely to be found in long-term relationships with clients.
“Switching the emphasis to renewal commission instead of initial commission is part of this thinking and providers are increasingly offering products where advisers can choose the remuneration model that suits them best.
“It is striking that the greatest concern for advisers is that of building long-term relationships. Advisers need more help to build long-term relationships and products should be designed with that in mind.
“There has been innovation in the market over the past year but it is clear the industry needs to do more to communicate with advisers and help them to understand the products that are already available."
Last week research from Adviser Breakthrough Solution, an adviser services organisation, found IFAs do not charge enough trail commission.
The research shows 93% of IFAs receive under 1% a year of trail commission and 27% do not even receive half a percent.
To comment on this story contact:
Tel: 020 7034 2679
E-mail: [email protected]
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created