We are primarily a fee based adviser but we recognise that some clients still prefer the commission method of remuneration. We therefore leave the choice of remuneration entirely up to the client. However, we believe that the most important thing to the consumer is value and not price and that it is for the client and the adviser to agree and determine, together, an appropriate payment without any interference from a third party.
Sadly, the financial services industry, in the past, has had the capacity to ‘grasp defeat from the jaws of victory’, such that commission has become poorly perceived by many as being open to abuse. The choice of commission or fee is, however, a moot one. From 1st January 2013, it will not be possible for any financial adviser, IFA, Bank adviser or otherwise, to be paid commission from Pension and Investment business as it will all be fee based.
We have found that our clients prefer to use a system of Customer Agreed Remuneration (CAR) where the amount of remuneration is agreed between the client and ourselves and which is commensurate with a fee that properly reflects the amount of work, regulatory obligations and which properly and adequately covers our costs in relation to the service provided to our customers/clients. This can be paid by a deduction from the amount that the client invests. Or by cheque if the client so desires. A client can opt to be advised on an hourly costed basis if desired but most recognise that determining the amount of time which needs to be accounted for plus the open ended nature of such an option makes this difficult to quantify.
The important point to stress is that the cost is agreed between ourselves and our clients – at the moment, the insurance company determines the amount of commission payable for a product.
Our proposition is to deliver the advice by way of an unbundled system where our clients are able to choose any, or all, of an offering of Advice, Implementation and Review. If the client wishes to arrange for another adviser to implement our recommendations that is their choice but we are more than happy to proceed with the implementation and review stage if requested.
Our Advice Process criteriais available and outlined elsewhere on this website and available on request.
Investment into a model portfolio may well form part of that process but only if it is suitable for that particular client. In short, we believe that advising clients is more than just about arranging a product that fits their immediate needs – it should be more attuned to meeting their overall future objectives, both for themselves and their families.
The financial advisory sector is going through a massive period of change where the effects are likely to be profound. It is believed that as many as 1/3rd of financial advisers will leave the industry altogether by January 2013. Some of the biggest high street banks are retreating from the provision of in-branch ‘advice’. The net effect of this will leave many clients without IFA’s who can help them to implement and review their financial requirements.
Such a change will place greater onus on individuals who in turn will look for value in financial services. We believe that value can no longer be delivered via the commission system.
We believe that Advice Fees offer value to the client whereas the ‘price’ of advice, as determined by the insurance industry by way of commission, does not.
If you have any queries or require clarification on our method of remuneration please do not hesitate in contacting us either by email or telephone.