£40,000 commission?

1echidna

whiteflag wrote: »

Given the way you would feel , how do you think advisers that started to take 1% trail commission a year ( instead of the normal 0.5%)or so ago and justified it by saying they would add value by using their "investment expertise", are finding dealing with their clients now?

I don't know how such an advisor would be dealing with his clients now, as, as far as I can see one's own "investment expertise" is very hard to assess, let alone compare it with one's peers to justify twice the commission. Some justification, if applicable, might be that the clients were seen more often and more work put into their portfolios.

whiteflag_3

1echidna wrote: »

Some justification, if applicable, might be that the clients were seen more often and more work put into their portfolios.

yes, the trouble is an "adviser" could have been working on a portfolio 24/7 over the last 6 months and still their clients would have lost money!

1echidna

whiteflag wrote: »

yes, the trouble is an "adviser" could have been working on a portfolio 24/7 over the last 6 months and still their clients would have lost money!

I agree entirely, it is rather like a group of hundreds of people taking a particular medication hoping to improve their condition, all becoming very ill indeed.

whiteflag_3

dunstonh wrote: »

The variety of business models to suit different types of clients should not be criticised.

According to who?

Most financial adviser models are flawed and should be criticised!

Dh, I think you make a fundemental error - the various types of business models you talk of exist to suit the advisers (not clients).

EdInvestor

whiteflag wrote: »

According to who?

Most financial adviser models are flawed and should be criticised!

Dh, I think you make a fundemental error - the various types of business models you talk of exist to suit the advisers (not clients).

It's a constant problem.DH will argue a point based on "new model" charging when most advisors are still in the dinosaur era, making as much upfront as they can, not least because they are either planning to retire , or work for a network and have little choice.

dunstonh

Dh, I think you make a fundemental error - the various types of business models you talk of exist to suit the advisers (not clients).

When did you start working for love then?

or work for a network and have little choice.

networks dont decide how you get paid. Thats salesforces.

whiteflag_3

EdInvestor wrote: »

most advisors are still in the dinosaur era, making as much upfront as they can

Not true, some but not most. (I only have this view based on other IFAs i know, speaking to broker consultants and clients I come across that have dealt with other advsiers)

What is your source ED?

whiteflag_3

dunstonh wrote: »

When did you start working for love then?

Not yet, and neither do any other advisers , hence they structure their businesses to suit them.;)

dunstonh

whiteflag wrote: »

Not yet, and neither do any other advisers , hence they structure their businesses to suit them.;)

They will also structure their business to suit their typical client. Certain clients are better on commission, some on fee, some on NMA.

If a firm is dealing with the lower end of the market it is more likely to be structured to commission. If a firm is dealing with the higher end it is more likely to be structured to fee basis.

Even the FSA have admitted that moving to fee basis will eliminate advice coverage for most of the bottom and middle end clients which is why they are allowing salesforces to continue to service them.

There is a fee only firm in this region that has a minimum fee of £2500. Its easy to call that a rip off for a lot of people. Especially when you know that the only software they run is Vertex adviser office and Exweb. No analytics, Truth etc. They also do no servicing either unless approached. So, its not a black and white situation. Hence I come back to the position that as long as the fee/charges are disclosed in advance and the choice of options is with the consumer then that is the ideal situation.

Given the choice of a £2500 fee or £80.71 commission which would you choose? Given the choice of a £2500 fee of £40,000 comission, the answer is different.

whiteflag_3

dunstonh wrote: »

If a firm is dealing with the lower end of the market it is more likely to be structured to commission. If a firm is dealing with the higher end it is more likely to be structured to fee basis

.

Agreed , but its still the firm thats deciding

There is a fee only firm in this region that has a minimum fee of £2500. Its easy to call that a rip off for a lot of people. Especially when you know that the only software they run is Vertex adviser office and Exweb. No analytics, Truth etc. They also do no servicing either unless approached. So, its not a black and white situation. Hence I come back to the position that as long as the fee/charges are disclosed in advance and the choice of options is with the consumer then that is the ideal situation."

Yes the trouble is it would appear that even when a consumer is presented with a commission of £40K they cant work out whether that represents good value or not.

BTW - do you use Truth?