Proposed Mortgage Broker Code of Conduct

kenshaz wrote:

Not quite sure what your views are yet,because you have been on the sidelines,your choice and that is the way some like it to be.But I will refrain from the hug for now at least,

My view was post #2

As has been stated by others - I thought that was how the board was operating already

Hope that claifies it for you.

C'mon let's have a hug and lighten things up please folks

Well I've tried, I really have, but it seems I will be reprimanded for whatever comment I pass, as I am STILL being personally targetted by Kenshaz

dunstonh wrote:

The challenge uses incorrect information and is not from a knowledgeable background. The fact he is attacking advisers for taking no initial commission and only 0.1% fund based trail shows this. Plus its clear from other posts he has made that he is anti financial services and appears to be on a bit of a crusade. I have no problem with that at all. Indeed, that is exactly the sort of thing I believe Martin is referring to with the right to have that opinion. However, it is the tone of the responses. "slimy adviser" whilst in discussion with an adviser on the issues is rude, aggressive and ignorant.

I havent reported, I have no intention of reporting. However, this is the sort of comment we often get, sometimes in general, sometimes aimed directly at us. When you spend time adding to the debate and answering questions, that sort of attack is out of order. Just a decent level of courtesy would be nice.

I have to say I find the suggestion that I was rude to you extremely offensive. I would like to request that you read what I wrote more carefully before making claims that I have insulted you.

I am on no crusades and have a genuine interest in finding out exactly what the true costs and best options are in respect of financial services.

Just for the benefit of those who have been misled by your claims that I was anything other than complimentary about the standards of your service, I repeat here in full, without omission, the passage in which I used the term slimy adviser:

It's interesting, btw, to note the true cost of commission: these lovely people:

http://www.75bps.co.uk/

"With effect from 1 January 2007 we will increase the annual management charge (AMC) on the Retail classes of our funds from 1.25% to 1.50%. These extra 25 basis points go directly to you, the adviser, as extra renewal commission."

pay 3% initial commission and 0.75% trail. Over 40 years, the 3% initial commission is dwarfed by a 30% trail.

So if an IFA were to persuade me to start a pension for a new-born child in this fund, over 68 years (assuming this would be the eventual retirement age), then the commission paid would be equivalent to 3% initial + 51% ongoing - 54% total. So if the commission were paid into the fund instead of to the advisor, then if you invested £100k you're effectively handling over £54k to the advisor on day 1.

It just goes to show the power of compounding over a long period. One wonders how much the extra 0.25% commission affects the unscrupulous advisor's decision-making process. Obviously he's thinking more about the potential of extra payments, which adds up to lots of money for him.

I personally think investors should avoid *all* commissions to advisors - the advisor needs to get paid for the work he has done, so ultimately he will get his money either from trail commission or by upfront payment. It makes no difference either way in the sense that the advisor is not doing anything out of the goodness of his heart - he needs to earn a living. So if commission is not paid, and instead the client pays an explicit fee, not only does it not cost the client any more money (as at the end of the day the advisor always gets paid whether the payment is upfront and visible, or behind-the-scens in the form of commission), but he should get a better service which is not influenced by slimey advisers ripping their clients off by selling them products designed to pay them the most money.

Clearly 'free' advice is nothing of the kind, but unfortunately this is unlikely to change as the financial industry is very happy to hide all the costs, as clients simply aren't prepared to pay a professional fee for a professional service, so instead they let themelves be blinded by smoke and mirrors and hidden fees (if the advisor receives a commission, then that is nothing other than a payment by the client).

I have no idea whatsoever why you think this passage is referring to you. If you actually look at the site, it consists of an apple with the headline '75/75, the new 50/50'. The marketing is then 'half for the fund manager, half for adviser'. Obviously this makes no mention of performance for the investor, simply a rather distasteful focus on commission rather than what's best for the investor.

Moreover, the passage clearly says 'if AN IFA were to persuade me', i.e. the indefinite article. If I had meant YOU, I would have said 'if dunstonh', wouldn't I. I have no idea why you think this is referring to you.

Would you disagree with me that the term "slimy adviser" applies to advisers who choose funds because of their commission rather than their performance. I'm sure you do not, as I have heard you criticising bank's advisers for exactly this reason in the past.

Do you identify yourself with these people? I certainly did not, and neither did I criticise you at any point. Indeed I said I believe that people should pay a professional fee for a professional service, and have never called your standards of service or professionalism into question at any point. Quite why you regard this as a anti financial-services crusade, I have no idea - I've said in the past that most people are not capable of making their own investment decisions, and would benefit from paying someone to manage their investments, e.g., here http://forums.moneysavingexpert.com/showthread.html?p=3648188

Neither did I criticise your 0.1% annual commission, in fact saying that 'Selestia does work out quite a bit better than Hargreaves Lansdown for a one-off payment'. I did not 'attack' your 0.1% trail commission at all: on the contrary, I said 'Of course this can make sense for the investor as he is gaining access to lower ongoing charges.'

I believe you owe me an apology, as accusing me of being 'rude, aggressive and ignorant' is outrageous behaviour, and an entirely inappropriate response to what was a reasoned discussion on the effect of trail versus upfront commissions, and the cheapest option for investors seeking execution-only (no advice) investments, as you stated that going through yourself could be cheaper than using a HL SIPP.

With respect to your comment:
"However, this is the sort of comment we often get, sometimes in general, sometimes aimed directly at us."

I'm not sure if you have said this because you didn't actually read my post, and imagine that I was attacking you, or if you believe that "slimy advisers" don't exist, and mis-selling doesn't happen. Do you really think that all advisers are wonderful and criticising the bad ones should be banned on this forum, and is somehow a personal slight to you? I'm not sure that that was the purpose of this site, as a PR service for IFAs.

Really, does anyone find this to be abusive:

whambamboo wrote:

btw, I think an up-front commission rebate model is more attractive for the investor from a marketing perspective:

5.2% contribution charge to the investor. You get your 4% commision rebate, so the investor pays 1.2%

Then if you take the upfront capitalised trail commission of 5.25%, and keep 1% for yourself, and rebate the rest, then the investor has:

100%
- 5.2% contribution charge
+ full 4% commission rebate
+ (5.25% - 1%) capitalised trail commission rebate

= 103.05% on day 1.

It would be obvious to any investor that this beats Hargreaves Lansdown hands-down - you put in £100,000, but £103,050 is actually invested - the investor receives £3,050 'free' (of course this is actually simply a case of the investor selling his right to commission rebates, and depending on the investment time frame, the investor could be better off getting the ongoing commission rebate instead, but by getting the money upfront it is made plain that you are better off), and the IFA receives £1,000 commission.

Are there any strings attached to the capitalised commissions? Would they want their commission back if the investor switched from a 1.5% charging fund to a lower charging fund?

I hardly think so, it actually appears to me to be rather flattering to you.

As I have said, your slur against me is abusive and unjustifiable, especially as I have always had the utmost respect for you and your advice and the quality of service you provide, so it's somewhat distressing to be insulted in this manner.

I have made no claims to being an investment guru: rather, I've asked open-ended questions trying to better inform myself, and have followed up on the replies with logical analysis. I have not offered any investment advice, and whatever incorrect information I used, for instance that your rebated commission was 3% as stated by Selestia, rather than the 4% you actually get due to your own personal arrangement, or assuming that your commisison described as '0.1%' was 0.1% upfront (and which I explicitly said "This commission seems rather low. Have I got this wrong?"), rather than 0.1% per annum, was not a material error and quite open for you to respond.

I tend to be highly analytical, and have got some useful answers on investment and costs which haven't otherwise been discussed, and if I have had any misapprehensions, I have continued to analyse and question until the correct answer has been reached. If I have been wrong in my initial beliefs, I have never been afraid to be corrected, or blindly insisting that I was right all along. I do therefore find your slur that I am "not from a knowledgeable background" to be unhelpful, as the acquisition of correct knowledge is rather the point of this site. E.g., there is quite an interesting discussion of costs on this four-page thread http://forums.moneysavingexpert.com/showthread.html?t=318059, where it was determined, inter alia, that OEICs have slightly lower entry costs but slightly higher ongoing costs than UTs due to the bid/offer spread.

I don't think your apparent attitude that no advisers should be criticised ever, even if they are blatantly commission-driven by '50/50'-type arrangements, does your cause much service.

I am waiting for your apology.

Whiteflag, I know Andrew well, and as far as I have seen he has always been a gentleman in his conduct whatever his personal opinoins on matters.

I'm logging off now to go visit a poorly friend. But have a nice day everyone :beer: