MSE News: FSA bans commission to advisers on investments

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  • TBeckett100
    TBeckett100 Forumite Posts: 4,732
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    Well well well, i think the IFA industry will be shedding a lot of low revenue customers as retainers etc are brought in. It will be more service and management driven than new business.

    The commission option isnt that bad anyway. Some of the contracts we use for bonds are very competitive for the client.
  • Rollinghome
    Rollinghome Forumite Posts: 2,650
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    edited 26 March 2010 at 9:36PM
    Well well well, i think the IFA industry will be shedding a lot of low revenue customers as retainers etc are brought in. It will be more service and management driven than new business.

    The commission option isnt that bad anyway. Some of the contracts we use for bonds are very competitive for the client.
    Not bad for whom? The IFA with minimal financial qualifications often gets paid more in commission for selling the product than the fund managers get for managing it. That's because the emphasis has been entirely on sales rather than good fund management. Rubbish products still sell if the commission is good enough.

    Over the last 10 years in many cases both of them have earned way more from their customer's money than the poor sap himself.

    If low-revenue customers are shed then so will be low-value IFAs. The only option for them to stay in a job will be to provide a service at a cost those customers consider to be good value and will pay. For those without the skills to provide quality services at a price their clients will pay it's back to selling double-glazing.


    .
  • snugglepet20
    snugglepet20 Forumite Posts: 454 Forumite
    Having been a naive first-timer who used a so-called independent financial adviser and got ripped off I think this is great news. The guy I used clearly recommended products based on commission and not what was best for me resulting in me paying a much higher price for things I could have arranged myself.

    Then I found MSE and saved a fortune and I now have products that are equal or better than the previous ones and cost me less. The charging of fees will probably encourage more people to DIY it and do their own research, when you start that you find that it is nowhere near as complicated as the financial advisors make you believe and that they are basically just printing off forms for you to fill in and charging you.

    Obviously some people do have complex investments with large sums of money and they may actually benefit from a financial advisor but that is not most people whose needs are pretty standard and who buy off-the-shelf products.
  • TBeckett100
    TBeckett100 Forumite Posts: 4,732
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    Not bad for whom? The IFA with minimal financial qualifications often gets paid more in commission for selling the product than the fund managers get for managing it.


    .

    the fund manager doesnt have the cost of dealing with joe bloggs nor has to pay indemnity insurance for the advice. fund managers manage billions so can get away with smaller charges.

    considering the service i offer, the benefit i provide, i am not in the double glazing club.
  • TBeckett100
    TBeckett100 Forumite Posts: 4,732
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    most people whose needs are pretty standard and who buy off-the-shelf products.

    enter stage left, the bank rep
  • dunstonh
    dunstonh Forumite Posts: 114,292
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    The charging of fees will probably encourage more people to DIY it and do their own research,

    The charges for DIY are likely to go up. Or at least explicitly they will.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • TBeckett100
    TBeckett100 Forumite Posts: 4,732
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    i think the commission model can work well for a client as well. Under the new regime the client who calls me to waffle on for 30 mins about their life will get a bill when her fund based doesnt cover it.

    do you as a client want to get billed for every phone call, every letter? the model will move to 1% trail as the norm and everyone will be worse off down the line.
  • wakeupalarm
    wakeupalarm Forumite Posts: 1,089
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    How does this effect existing cashback trail commision rebates? Will the IFA continue to receive this from fund managers on existing investments after 2012?
  • dunstonh
    dunstonh Forumite Posts: 114,292
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    As it stands, all existing contracts will continue unchnged. It will be on new contracts only. However there are still unknowns. One popular theory is that there will probably be a new class of unit trust/OEIC. Also, we dont know if you will be able to move off a trail fund into a non trail fund or whether you will have to change the actual product to access the new class.

    Obviously cashback models wont work as there will be nothing to cashback. However, instead they will start charging explicitly. However, expect to see something similar to what you pay now. 1.50% minus 0.25% cashback is the same as 0.7% fund house, 0.3% platform and 0.25% intermediary.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Pincher
    Pincher Posts: 6,554 Forumite
    How about £20 per hour?
    That's about a teacher's salary.

    Don't tell me they think they are more qualified than a teacher.
    I would say they are on a par with a travel agent qualification wise.
    I passed the Investment Management Certificate in 2001.
    It's funny, there is a section on professional conduct and ethics.:rotfl:
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