Life insurance ifa fee

dunstonh

So £600 for carring out this transaction, seems very, very expensive to me. How much work is involved? 2 - 3 hours if not less?

I do very little life assurance as I focus on investments and pensions and I am fee based. However, I would fee out life assurance at £500. Indeed, for everything my minimum fee is £500.

It is probably 2 hours factfind, 30 mins research, 1-2 hours presentation/sign up and 1 hour complete report and submit docs. Allow another 1 hour for misc chasing and dealing with issues (as an average).

Add in unsocial working hours, a lifetime of liability and the fact that you do not earn every day but have to average it out to compensate for those that do not proceed etc. and that insurance is still subsidy based.

It's a shame that fees are not required to reflect actual work and effort involved by the RDR as you IFAs might well see a big increase in business if it did.

I have been working as close to RDR as you can get pre RDR and it becomes more expensive for most I deal with. Mainly due to lack of cross subsidy.

People I know percieve IFAs to be expensive and most don't use one.

IFAs do generally deal with the middle to top end of the market and will often price themselves out the market for the lower end as they just dont want to deal with that end as you cant afford to do so. This is also why you are seeing the banks, who tend to focus on the bottom end, starting to pull out or scale back their operations.

IFAs should be cheaper but we have a ridiculous level of costs which we have little or no choice to pay. The regulator is in part to blame for this. Regulation and compliance with regulation takes £1 in every £3 earned. If you saw some of the rubbish we have to keep track of to report to the FSA each year or have on file to be evidenced should we be asked then you would understand the costs involved but you would also think it is crazy. The level of micromanagement is daft.

You could cut costs significantly by focusing regulation where it is needed.

weighty1_2

A point often overlooked is that the commission earned by the adviser isn't necessarily, or only, designed to reflect the amount of work done.

How would insurance companies attract their clients if it wasn't for IFA's? They would run lengthy and flashy advertising campaigns costing millions of pounds. The IFA negates the need for this and are therefore receiving, in effect, a finders fee for taking said client to that particular company.

The issues surrounding commission payments only really came about with the birth of the discount broker whose only weapon is to sell on price alone usually via a channel with extremely low running costs ie. the internet/web based sales. Those individuals going directly to insurance companies do not generally receive premiums cheaper than those offered by IFA's, it's simply that the insurer doesn't need to pay out the commission in that instance and retains it for increased profit margins.