What happens to a IFA's commission if I cancel my Life Insurance Policy?

markS_3

VIGILANT22 wrote: »

what's it to you whether i have 10 or 10000

They are mostly ill-informed since you ask. Maybe you are an IFA ?

magpiecottage

I think you'll find one high profile individual who does NOT think a move to only allow fee based independent financial advice goes by the name of Martin Lewis.

markS_3

magpiecottage wrote: »

I think you'll find one high profile individual who does NOT think a move to only allow fee based independent financial advice goes by the name of Martin Lewis.

His concern is based on the fact that some people will choose to go without advice rather than pay for it which is exactly the same bogeyman being trotted out on the quiet by the industry lobbyists.

That concern could be handled by setting up a means tested Financial Aid scheme along the lines of the Legal Aid scheme paid for out of an industry levy with IFAs getting paid a flat rate . Their argument against would almost certainly be that it would cost too much and increase prices for everyone but I don't really buy that one when we look at the obscene amounts currently being doled out to IFAs for very little work.

Do you honestly believe that the OPs IFA has done nearly £800 pounds of work to decide which life insurance policy was best ? If we took an hourly rate of £50, that would mean the IFA had spent 2 full days researching the best financial product for the client whereas the reality is that he has probably spent well under an hour in total.

starrystarry

markS wrote: »

They are mostly ill-informed since you ask.

Too true. I do wish he/she would stop shouting, putting words in red, telling everyone they're wrong when it's him/her that's talking nonsense. Anger problems methinks.

Wutang_2

magpiecottage wrote: »

I think you'll find one high profile individual who does NOT think a move to only allow fee based independent financial advice goes by the name of Martin Lewis.

Yes, a high profile journalist. There are some high profile butchers who think likewise, but again - its not really their specialist subject.

reddyman

markS wrote: »

His concern is based on the fact that some people will choose to go without advice rather than pay for it which is exactly the same bogeyman being trotted out on the quiet by the industry lobbyists.

That concern could be handled by setting up a means tested Financial Aid scheme along the lines of the Legal Aid scheme paid for out of an industry levy with IFAs getting paid a flat rate . Their argument against would almost certainly be that it would cost too much and increase prices for everyone but I don't really buy that one when we look at the obscene amounts currently being doled out to IFAs for very little work.

Do you honestly believe that the OPs IFA has done nearly £800 pounds of work to decide which life insurance policy was best ? If we took an hourly rate of £50, that would mean the IFA had spent 2 full days researching the best financial product for the client whereas the reality is that he has probably spent well under an hour in total.

Thanks for all the repies chaps...So most likely they will claw it back. Makes sense.

And that brings me onto my second point. How exactly has the IFA done £800 worth of work to recommend that product?

And why have non of the IFA's I have visited suggested I can opt for fee based service only rather than commission free?

stephenni1971

Are you sure you are dealing with an Independent Financial Adviser and not someone who is tied or whole of market???

An IFA should present you with a document at outset giving the charging structure and the option of fees/commission.

dunstonh

The FSA has proposed that the whole business of financial service providers paying commission to direct to IFAs shouldn't be allowed in future on the basis it is the root cause of most mis-selling.

The FSA has made no proposals to include insurance in the RDR. Also, there has been no evidence of mis-selling due to commission. The FSA's main directive is to separate advice into a more obvious charging process and remove the ability of the providers to set the remuneration. IFAs will still get paid in many cases will get paid more. Those that will be better off will be the high net worth clients. However, most IFAs in those areas already work on a similar or the same basis as to what the RDR proposes.

How exactly has the IFA done £800 worth of work to recommend that product?

What makes you think the IFA gets to keep all the £800? Next you will be claiming that Tesco get to keep every penny on every item they sell.

If the IFA is an employee, then they probably only get 20% of it. Even if you saw a partner or director, there is still costs. Business premises, staff, levies, compliance etc What you see there is the gross amount the adviser receives. Not the net amount.

And why have non of the IFA's I have visited suggested I can opt for fee based service only rather than commission free?

1) because small premiums are better priced on commission basis. 2) Insurance doesnt require fee basis to be offered 3) they may not even be an IFA (over half those that seek advice from tied agents, believe they are seeing an IFA).

Dangermac

markS wrote: »

His concern is based on the fact that some people will choose to go without advice rather than pay for it which is exactly the same bogeyman being trotted out on the quiet by the industry lobbyists.

That concern could be handled by setting up a means tested Financial Aid scheme along the lines of the Legal Aid scheme paid for out of an industry levy with IFAs getting paid a flat rate . Their argument against would almost certainly be that it would cost too much and increase prices for everyone but I don't really buy that one when we look at the obscene amounts currently being doled out to IFAs for very little work.

Do you honestly believe that the OPs IFA has done nearly £800 pounds of work to decide which life insurance policy was best ? If we took an hourly rate of £50, that would mean the IFA had spent 2 full days researching the best financial product for the client whereas the reality is that he has probably spent well under an hour in total.

I would be really grateful if you could advise where the £50 per hour bench mark comes from. I would be interested to see the business model. Thanks

dunstonh

I would be really grateful if you could advise where the £50 per hour bench mark comes from. I would be interested to see the business model. Thanks

I missed that bit. £50 an hour isnt worth the effort. You just wouldnt cover the costs of software, compliance and administration, let alone the knowledge and liability.