Ban on commissions in UK
From Jan 1st, commissions on the sale of most financial products will be banned in the UK. This process has been called the Retail Distribution Review (RDR). It is scaring the living daylights out of the Irish financial advisor market, for obvious reasons.
I hope it comes in here also, although I expect it will be in a diluted form. The current financial advice model is badly broken. The current situation where Financial Advisors get paid very high commissions just to sell investment products and pension lump sums is not good for the consumer.
There needs to be a fair level of compensation commensurate with the quality and breadth of advice given. For too long I have seen easy money being earned on the back of a single client meeting and one application form.
It should be the client and advisor who agree the amount to be paid for a service, not the advisor and product producer. This goes for solicitors and accountants, so why not us? The main reason professionals can charge fees is they have gone through much more rigorous and comprehensive qualification processes, so they are confident they can offer expertise which is worth paying for. If we want to be considered as a profession we have to act like one. Alternatively we continue to act as a ‘sales’ led industry and sooner or later the regulators will force RDR on us because we are just not offering good value.
At the CERTIFIED FINANCIAL PLANNER Professionals Annual training conference yesterday there were some inspirational stories from international ‘fee-based’ advisors who illustrated exactly how we can offer really great service to clients. Advice which is ethical, of high quality and completely client focused. It was great to see so many Irish advisors at the day which shows change is starting to happen. There are now 148 CFP Professionals now qualified in Ireland which is a big step in the right direction.
Let’s hope it continues and grows!!
Do you need to know more about our Financial Planning process call Investwise today at 016452002