IFA 'independance' question

sandsy

Loughton_Monkey wrote: »

To put my cynical hat on, though, I still have my doubts, because as far as I know, the RDR has not investigated the 'Independence' associated with lavish golf-days, lunches, and 'seminars' [in Bali preferably], offered to IFA's by Financial Product Providers, which may have some 'vague' link with the volume of business placed!

Never heard of the inducements rules?!

Loughton_Monkey

sandsy wrote: »

Never heard of the inducements rules?!

Yes, but it's a bit vague currently. Due to be tightened up in RDR?

cyclonebri1

Apologuies as I have'nt read all the post, but for me an idependant financial advisor may not be tied by reasons of employment, but with all due respects he will be tied by his/her own financial gains.

Call me sceptical if you want, but I'd lay odds the IFA will go for the option that favours self over client. Sorry if that offends.

Velcro_Hotdog

cyclonebri1 wrote: »

Apologuies as I have'nt read all the post, but for me an idependant financial advisor may not be tied by reasons of employment, but with all due respects he will be tied by his/her own financial gains.

Call me sceptical if you want, but I'd lay odds the IFA will go for the option that favours self over client. Sorry if that offends.

If the IFA takes a fee (based on work done) or commission as a fee which comes straight from the clients pot then the IFA will be paid the same regardless of which company he places the business with. Get an IFA who works to that or similar model and you should be ok.

dunstonh

Call me sceptical if you want, but I'd lay odds the IFA will go for the option that favours self over client. Sorry if that offends.

Which is why we nearly always see agree the fee in advance. Most of the modern investment based contracts are fee based rather than commission anyway. So, its not the product providers that set how much the adviser is getting paid. Its you.

dunstonh

How does that work, as you've stated many times your fees are percentage based. Until you've done all the work and presented your recommendations' you have know idea if the client will take up your recommendations, therefore its impossible for you to agree a "fee" in advance.

I have actually done little in that way of stating exactly what it is. It's others that have speculated what my actual fee basis is. Bits of the fee option have appeared in posts but never detailed to show the full breakdown. Indeed, only one post has actually laid out that option and that was in a post recently where you laid yours out and someone asked me to give mine. That was just one of the fee options offered. I have several to cater for choice.

The fee agreement covers the remuneration and the level of fee commitment will increase at certain stages. I believe that is fairly standard nowadays. There are points in the process where you inform the client if they are going to incur fees and you let them know before you proceed.

My fee options are really irrelevant though. I lay out my fees, they are not influenced by provider and there are a few options to cater for different types of people. What I charge or how I charge doesnt matter to an internet forum of unknowns. The only thing that does matter is that people realise that they should agree the remuneration with the adviser rather than go with commission. It doesnt matter if its hourly, fixed charge or percentage based with a cap. Its knowing what it is that matters.

While I agree that the product providers no longer dictate how much the adviser gets paid,its certainly not the client who decides either. If you are a legitimate profitable fee based adviser, its the adviser who sets how much he/she is being paid not the client.

The client can agree to pay the fee or go elsewhere. The markets effectively set the fee on a basis of supply and demand. If a firm can do business with a fee of £1500 and another quotes £2000 or another quotes £10,000 then the potential client can choose which one they want to use. The potential for provider bias was being highlighted by cyclonebri1 but that largely does not exist nowadays and wont exist post RDR. The £10,000 only needs to take on 1 in 10 clients compared to the £1000 one. If the £10,000 is happy doing 20 clients a year and the £1000 doing 200 clients a year then that is their choice. If it works, they stay in business, if it fails they don't.