Before all sales people, associates and affiliates panic let me explain that the above headline applies only to Financial Services Products in UK.
The UK Financial Services Authority have had concerns for some time that financial services products are too often recommended by unscrupulous financial advisers on the basis of the amount of commission they receive rather than being the best product for the client.
The majority of professional financial advisers in UK, and elsewhere, take pains to provide clients with the best advice they can but there has been a persistent band of rogue advisers who think only of themselves.
If your business is in financial services you will probably have seen this coming. But read on as I shall be coming back to you later…
If you are not in financial services then this doesn’t affect you, does it?
Well, yes it does! Especially if you have been used to getting your financial advice for free. Or apparently for free…
Most people in UK don’t pay an adviser for recommending life insurance, investments, pensions etc. because the adviser has been remunerated by the life, investment or pension company by way of commission on the sale. Obviously the companies paying this commission have to make it back in some way and that is by some form of management charge built into the product. This means that the client is actually paying this commission indirectly.
Under the new system, the client (you) will be expected to pay the adviser a fee for the financial advice given. This should mean that the product should be better value for money as there are no commission charges to account for and your adviser has no reason not to recommend the best product for your needs.
However, if you take financial advice but take no action on that advice you will still have to pay the adviser’s fee. Unlike in the commission situation where you can just walk away leaving the adviser with nothing.
Now, back to the financial advisers out there.
The good thing about this change is that you will always be able to get paid for financial advice you give regardless of whether the client takes that advice or not. You will be free to advise the client on any course of action you feel is appropriate to their financial circumstances without any concerns about likely remuneration.
Your only problems, if you have not been charging on a fees basis up until now, is one of educating the client in the new ways of financial services and setting up the appropriate contracts and procedures to handle the new regime.
I’ve been talking to a very senior financial adviser about this as he has operated a fees based financial service for over twenty years now. He certainly understands the problems facing commission based financial advisers over the next couple of years.
In fact he has been helping many financial advisers move over to a fees based system for the last ten years or so.
His name is Terence P O’Halloran, ‘ Terry’ to his friends, and he has been a major player in the industry for well over thirty years. Terry first unveiled his Fee-Pac product for financial advisers over ten years ago and has steadfastly kept it up to date, improved, evolved and expanded it over the years into a major package suitable for any fees based profession.
Fee-Pac now includes a full video training seminar on setting up a fees based business, complete client and adviser documentation as well as all the admin files needed to set up a successful fees based practice. This is an extremely professional piece of kit.
If you are a financial adviser or thinking of getting into that business then check out Fee-Pac here. I can’t believe how little he is charging for it considering its potential value to you in the coming months.
Interesting times ahead!