Barclays: advise caution...

jem16

whiteflag wrote: »

I find it difficult to understand why you do £600 worth of work yet are happy to accept £250 for it . How can you be profitable?

Perhaps his business model actually brings more business in through recommendation and word of mouth?

jem16

pooter wrote: »

The other aspect is whether it is right that all the ads offering jobs for IFAs offer a small salary plus commission or commission only. Does that really encourage unbiassed advice?

Back again EG?

dunstonh

I find it difficult to understand why you do £600 worth of work yet are happy to accept £250 for it . How can you be profitable?

The two main towns in my area are amongst the poorest in the country. Generally you find its volume rather than value for a lot of the transactions. On the transactional side, the average premium value on singles is just over £7000. The servicing side is obviously higher value as the portfolios are bigger. No trail is taken on transactional.

We used to have a joke in our area that when people retired on to the state pension they got a pay rise.

If you find our business model admirable , whats stopping you from adopting it.

I give the choice rather than going with one option. The most common option taken is the agreed fee but using the commission to pay for the fee. With investment business it doesnt make one jot of difference but with pensions its better that way.

Back again EG?

He can't leave it alone can he. I wonder how long it will take for this login to get banned.

whiteflag_3

[

QUOTE=jem16;20736687]Ok I'm with you now. It sounds like your business model would be rather expensive for the smaller investor. Unfortunately this would push a lot of people into the hands of the tied/bank "adviser" I feel.[/QUOTe

exactly - all IFA's business models are expensive , the 7% commission on the odd £100K investment pays for all the loss leaders.

Is the natural trail rebated then?

yes

If a fee is agreed in advance, whether paid through commission or actual cheque I can't see what difference it makes

.

it doesnt , but theres no agenda either

jem16

whiteflag wrote: »

exactly - all IFA's business models are expensive , the 7% commission on the odd £100K investment pays for all the loss leaders.

Not all - some business models rebate most of that 7%.

Myrmidon_J

jem16 wrote:

Not all - some business models rebate most of that 7%.

7% is a staggeringly high level of commission. However, I work for an IFA and sometimes we use such contracts. Our standard fee is 3.0% (discounted for larger investments), so any excess is used to enhance the allocation rate for the client. Our income (whether from fees or commission) does not depend on the contract.

These "old-school" contracts (all generally with high establishment charges, exit penalties, hidden charges, etc.) do not have long to live, in the field of professional advice.

But contrast the behaviour of the tied-agent (salesman) - who will always take maximum commission on products designed with maximum commission in mind: complex structured products, 'With Profits' bonds (for a long time), etc.

It is institutionalised. It is not OK!

jem16

Myrmidon_J wrote: »

7% is a staggeringly high level of commission.

Yes I agree.

However, I work for an IFA and sometimes we use such contracts. Our standard fee is 3.0% (discounted for larger investments), so any excess is used to enhance the allocation rate for the client.

I believe this is the fairest way to go. A standard fee whether paid through commission or a cheque regardless of product removes any possible bias.

What does your company class as larger investments?

whiteflag_3

Myrmidon_J wrote: »

Our standard fee is 3.0% (discounted for larger investments), so any excess is used to enhance the allocation rate for the client.

but isnt that still a commission , its a percentage based on the amount invested?

So is your "fee" for investing £25k, £750 and £50K , £1500?

whiteflag_3

jem16 wrote: »

I believe this is the fairest way to go. A standard fee whether paid through commission or a cheque regardless of product removes any possible bias.

but its not a "fee" and if one investor is paying twice as much as another for the same work , how is that fair?

jem16

whiteflag wrote: »

but its not a "fee" and if one investor is paying twice as much as another for the same work , how is that fair?

I said agree a fee - that may be a percentage to suit smaller amounts or an hourly fee to suit larger amounts. It could also be argued that one investor is paying half as much than the other and therefore getting a great deal rather than someone paying twice as much and getting a worse deal.

You said earlier that any products you sold would be on a commission or fee basis. So if your client chose commission basis on a £100k investment bond with a 7% commission level presumably you would take this plus your financial planning fee?

What do you take as a retainer fee by the way?