A client approached us recently to review her investments. She had seen another adviser (based offshore) a few years previously and with his ‘help’ she implemented an offshore investment, for which he received the princely sum of £17,000 in commission.
Therein lies two issues:
1) How can £17,000 ever be justified for the implementation of a financial product?
Before anyone mentions “percentages”, the size of the investment is moot in this too; accepting additional advice risks inherent with large investments that may justify a higher fee I am firmly in the camp that believes remuneration should be commensurate for the work done.
In addition, ongoing trail commission was being paid yet, needless to say, the client had not heard from the adviser since making the investment. What service was being provided for the commission received?
It is this greed that tarnishes the professional image that the majority of IFAs and Financial Planners are trying to forge.
2) It further peddles the myth that clients do not pay for commission.
The product in question was highly charged but, of course, because the client hadn’t written a cheque the commission was ‘free’!
So, to any investors reading this, please, please, please ensure you understand the following before you agree to implement any financial product:
1) What are the charges?
2) How much is your adviser getting paid at the point of sale and in future years?
3) If you are comfortable with the amount of commission being received understand what service you are receiving in return.
4) If in doubt, shop around. You would test drive more than one car so why would you not do the same with your financial security?
