Advisers have no excuse not to speak with clients about transferring to paid fees after trail commission ends in April 2016, the managing director of business acquisition firm Retiring IFA has said.
Steve Hagues said: “The problem comes about where the adviser does not know the person as well or has not had much face time.
“When talking to clients about this, the main thing is to stress that it does not cost any more than the old commission.”
He added that there could be issues for firms inheriting client banks, where advisers may not have any familiarity with certain clients, but that it would be worthwhile for firms to make the effort.
Adviser champion Garry Heath, who has been involved in research on the state of the industry following the arrival of the retail distribution review, said: “If you are a transactional IFA, you have got 101 little bits of trail commission spread all over the place.
“If you have got that kind of business and your clients are used to not paying fees, you could be in a difficult position.”
In August, Scottish Widows announced that it would remove initial commission from November 2014 and that ongoing commission would be removed in April 2016.
Last week, the Financial and Technology Research Centre created a ‘disturbance matrix’, aimed at showing advisers what circumstances could lead to commission being switched under different providers.
It covers 15 events which could potentially trigger a switch-off, including fund switches and re-registration.
The product types covered by the system, which is free to advisers through the quality analyser tool on advisersoftware.com, are pensions, collective investments, onshore bonds, offshore bonds and unit-linked life assurance.
Adviser view
Kim Barrett, managing director of Hertfordshire-based Barretts Financial Solutions, said: “There is a small cadre of IFAs that are ready for April 2016 and will revel in it, but many are still not prepared.”
