An IFA has said his clients were “absolutely horrified” at the charging changes brought in under the Retail Distribution Review, saying many felt they are being offered less choice in payment options due to commission being banned.
In an interview with FTAdviser, to be published later today (31 May) Chris Miller, proprietor of Bath-based Christopher Miller Financial Planning, said that his clients preferred to pay for his services via commission and were “absolutely horrified” when he told them of the RDR changes.
Mr Miller’s said his clients are not high-net worth, but what he describes as “middle England”.
He said: “I told them about the RDR and they were absolutely horrified at the reduction in choice as to how they were going to pay me – the banning of commission.
“The issue of commission never was an issue between me and my clients. Every element of commission was discussed early in the discussion process. It wasn’t, ‘oh by the way I am going to be paid by such and such’.
“So that has always been extremely transparent and never an issue so when this method was removed from them they were pretty horrified.”
Mr Miller now charges clients, in most cases, a percentage of the investment, believing that it is a “simple concept” for the client to latch onto. He said despite the negative reaction he has not lost any clients as a result of the enforced switch.
He said: “They know how much is potentially being invested when we go through the fact find and when we are having our discussions and I can pitch my percentage fee against that volume of investment,
“They know they are not in for any larger costs whereas if one had an hourly based fee, they may do. With an hourly based fee, although you can have a cap, this can work against the adviser and work against the client so I have avoided that where possible.
“Generally I have a minimum fee for carrying on and doing certain elements for if they don’t proceed with the investment as someone has to pay for it somewhere otherwise we all go hungry.”
The full interview will be published later today.
