MOst adsvisers are unfit for purpose

Gorgeous_George

regularsaver1 wrote:

I know the tied advisers in my bank are paid very well, but they do a good job and follow regulations - up to client if they go with the advice

why are they paid so much more that mortgage advisers is what beats me???

Their profits are probably greater

regularsaver1 wrote:

anyhow, some of the PFA's that i know, used to be independent but chose to work for the bank. maybe they earn more this way? I'm not sure

They need to know less and, as you allude to, they probably earn larger %ages on tied products.



GG

regularsaver1

Yeah most probably - but i suppose take their experience with them

dunstonh

Banks have become very aggresive in trying to sell you their ``products``.

The best way to stop a bank trying to sell you financial services products is.... become an IFA.

A number of my friends still working in the bank say they hate it now. Even the cashiers have targets to sell things. Its all sell sell sell. That environment has got to be bad for the consumer.

regularsaver1

It is all sell sell sell. That is the environment. I know what you mean

dunstonh

It is all sell sell sell. That is the environment. I know what you mean

It doesnt need to be though. The sales model relies on policy flogging and only paying the adviser/salesperson once on each sale up front. That means that once they have sold that policy, there is no reason for them to service it again as they dont get paid again or it doesnt go towards their target. So they have to move onto the next person.

Many in the industry feel this business model is beginning to die. A lot of the big firms that work this way have been going under or are beginning to suffer.

The NMA business model is much more reliable as it takes the commission away from the upfront sale and puts it into servicing and performance. It also gives the adviser a steady income stream so there is no need to policy flog. You just service what you have and get steady growth from there. No pressure on sales at all.

All that said, it should also be noted that the UK has the highest number of IFAs in the world and the lowest charged products with the exception of Australia (where the model is very much NMA style). This board tends to focus on the negative but you when you see what its like in other countries where the insurance companies run the system and there is no regulatory body, you would hold the UK up as an example to the rest.

Tiggs_2

dunstonh wrote:

Many in the industry feel this business model is beginning to die. A lot of the big firms that work this way have been going under or are beginning to suffer.

yep....going to go the way of all the life office sales forces - the business model that does work is to pay commision up front and a trail, in fact....the life offices that had that sales model would still be running with it if they didnt waste all their money on training 100 people to end up with 1 sales person. It was always the way that if you took the top 10% of tied advisers they were very profitable.....they were just generating profit for the other 90% who still wanted their company car despite only making 20k a year for the firm!

TMFTP

The (very large) company I work for pays more to IFAs in trail commission alone each year than it does for its entire customer services operation.

Significantly more.

Moral? Let's ALL be IFAs....

:-)

whiteflag_3

TMFTP wrote:

The (very large) company I work for pays more to IFAs in trail commission alone each year than it does for its entire customer services operation.

Significantly more.

Moral? Let's ALL be IFAs....

:-)

If IFAs didnt exist would you have a job?

dunstonh

The (very large) company I work for pays more to IFAs in trail commission alone each year than it does for its entire customer services operation.

Given the state of some companies servicing, that doesnt surprise me. My lunchtime sandwiches probably cost more than the servicing dept of some.

The UK has the highest proportion of IFAs in the world. It also has the second lowest charged products in the world (just behind Australia). In countries that got rid of IFAs either directly or indirectly, the charges of their products went up.

IFAs reduce the profitability of the providers because of the pressures placed on them by the IFAs to provide competitive products. A move to a tied or multi-tied arrangement as the majority or only distribution channels would allow for an increase in profitability to the providers. Ironically a position that the FSA has confirmed and encouraged.

EdInvestor

It also has the second lowest charged products in the world (just behind Australia).

Charges on funds in the US are much lower than here.

See how high charges eat up your investment profits:mad:

The best measure of charges is the Total Expense Ratio

Average US TER: 0.92%
Average UK TER: 1.68%

Almost twice as high.