Finally, we have it straight from the FCA themselves; 6 per cent of the population have received financial advice and yet 25 per cent could probably have done with it, proof itself that the removal of commission has failed.
Much has improved in our industry over the past 30 years but not all. Before 1986 the man in the street received advice from the likes of Prudential & Pearl, Industrial Branch. Admittedly not great value, without door collection of premiums and advice they would have no life cover, no savings and no pension. For the better off there was Ordinary Branch business and for the well off they had independent financial advisers.
Commission is not the devil; clients are not interested in how much you earn out of a product, they want to know that it does what it is supposed to; after all, when buying sausages at the butcher’s do you want to know what his profit margin has been or the costs of delivering them to the shop?
No, it is not commission, it was the removal of the old Life Office Association rates that was the problem. Until then there was a maximum amount of commission that an insurer could pay to the adviser, the removal of this limit saw the chase for bigger and bigger commissions happily paid by the companies to obtain new business often to the detriment of clients. The man in the street cannot and will not pay a fee, but he certainly needs this industry’s help in these uncertain times.