Twice I’ve had to explain that although we have the expertise, the fees are too low and companies are not engaged sufficiently to make the liabilities worthwhile.
My practice has been charging fees and logging time since 2000. I’ve never liked commission, which is not linked to time taken for a piece of work.
However, the one area where I always thought commission had a role was workplace pensions in the small and medium enterprises sector.
Not at the pre-RDR levels, mind you, but as a means of payment of a fee. Adding a couple of basis points onto a product to pay for advice when an employer was already facing an additional contribution cost always seemed logical.
But now commission on (new) schemes has been banned, the employer has to pay.
Except they don’t want to/can’t afford to. So they either get someone to do it internally (possibly not knowledgeable, certainly not regulated) or they reluctantly pay the fee but try to limit an adviser’s involvement to keep costs down.
As a result many (most?) IFAs have decided not to advise on this market.
Has the government’s focus on cost been to the benefit of employees?
Chris Budd is managing director at Ovation
