First consultation with Advisor

[monagt]

Listens attentively to needs.
Picks best option from his list of companies (independent, not tied, 6/6 companies to choose from)
Presents "best option" for them
No mention of Fees or how he gets paid for visit to home and policy.
No mention of "cooling of period"
Has documentation ready to sign - following day.

Is this OK?

I'm NOT casting aspersions on the advisor but just wondering is it fast with not enough info of fees?

 

[Steven Barrett]

Did you not ask about fees? And what are they paying for? Is it a pension, life cover, investment?

Is having everything ready for you quickly a problem? Should it take longer? I'm confused as to why this would be an issue.



Steven
www.bluewaterfp.ie

 

[Dan Murray]

Hi Monagt

I have a big issue with advisers not explaining their remuneration basis (and the charging structure of products). Sounds like this guy is going to receive a commission payment.

Why don't you record here what the product is, its charging basis and what investment recommendations were provided (if relevant)? [It will be useful to calculate the difference between the "wholesale" cost and the "retail" cost to see how much yesterday's meeting actually cost you! To do the exercise more accurately, one would need approximate premiums and age!]

 

[monagt]

It's not for me, and they did not ask for fees and the information wasn't offered.
It's a joint policy to cover life.
Everything ready quickly - no I don't see it as a bad thing.

No it's not an issue, just wondering about the process.

Is there one set out by anyone?

Sorry I have confused you, Sean And not an issue, more a "I wus jus wondering"

 

[monagt]

Hi Monagt

I have a big issue with advisers not explaining their remuneration basis (and the charging structure of products). Sounds like this guy is going to receive a commission payment.

Why don't you record here what the product is, its charging basis and what investment recommendations were provided (if relevant)? [It will be useful to calculate the difference between the "wholesale" cost and the "retail" cost to see how much yesterday's meeting actually cost you! To do the exercise more accurately, one would need approximate premiums and age!]

I will get details when I get home from abroad

 

[Steven Barrett]

For protection cover the advisor fee is built into the contract. Each insurance company has a number of different commission structures for life cover plans. The one the advisor picks has no effect of the price for the client.

Paperwork with commission payable to advisor should be given to the client at the second meeting.

As setting up life cover etc is something we do a lot, most of the paperwork is templated, so it can be completed quick enough.

I would see nothing wrong in the steps the advisor has taken so far. As long as the clients are happy with the level of cover they are taking out and how that figure was arrived at.


Steven
www.bluewaterfp.ie

 

[Gerard123]

Would you buy a car and not ask for the price?

While the advisor should of course have been clear on fees, there is also an expectation that people apply a bit of common sense. Did they think the guy was working for free?

 

[Gerard123]

For protection cover the advisor fee is built into the contract. Each insurance company has a number of different commission structures for life cover plans. The one the advisor picks has no effect of the price for the client.

Paperwork with commission payable to advisor should be given to the client at the second meeting.

As setting up life cover etc is something we do a lot, most of the paperwork is templated, so it can be completed quick enough.

I would see nothing wrong in the steps the advisor has taken so far. As long as the clients are happy with the level of cover they are taking out and how that figure was arrived at.


Steven
www.bluewaterfp.ie

Normally I agree with this poster but not this time. Should be upfront on fees, should have been set out in meeting 1, fine for the paperwork to be in meeting 2 as it has to be prepared. Above almost reads like "its in the small print" sotospeak. There should be an openness and clarity on fees, it should be in plain English so that a reasonable person, not necessarily financially literate, can understand.

 

[Dan Murray]

.......Should be upfront on fees, should have been set out in meeting 1, fine for the paperwork to be in meeting 2 as it has to be prepared. Above almost reads like "its in the small print" sotospeak. There should be an openness and clarity on fees, it should be in plain English so that a reasonable person, not necessarily financially literate, can understand.

This is my opinion also and related to the point I made on an earlier thread today
http://www.askaboutmoney.com/threads/avc-questions.199080/

For protection cover the advisor fee is built into the contract. Each insurance company has a number of different commission structures for life cover plans. The one the advisor picks has no effect of the price for the client.

Why not have non-commission rates like they do in the UK? This ensures complete transparency. For example, is it true that in PHI policies, the standard commission is a flat 30% for the entire term? So, say the premium is €3,000 a year - the advisor is getting €900 each year. This is fair enough for the first year but thereafter I really don't think so.

So are non-commission contracts available in Ireland and if not, the question is why not?

 

[T McGibney]

Would you buy a car and not ask for the price?

When you buy a car of course you know the price, just as you know the price of the pension/investment policy you're buying. But will you expect the garage salesman to tell you his own margin or commission he's earning on the sale?

 

[monagt]

Would you buy a car and not ask for the price?

While the advisor should of course have been clear on fees, there is also an expectation that people apply a bit of common sense. Did they think the guy was working for free?

Common sense...Work for free....... Not as simple as buying a car...I think the onus is on the Professional to cover all the bases and more importantly answer all the questions that were unasked.

 

[Dan Murray]

When you buy a car of course you know the price, just as you know the price of the pension/investment policy you're buying. But will you expect the garage salesman to tell you his own margin or commission he's earning on the sale?

You have, I believe, inadvertently, stumbled on the point.

Someone selling you a car is a............salesman.

Financial advisers want to be considered as "professionals" and share the attributes of professionals. I can't understand how you don't understand this. Your fee is not a function of the client's tax bill, right?

 

[monagt]

Would you buy a car and not ask for the price?

While the advisor should of course have been clear on fees, there is also an expectation that people apply a bit of common sense. Did they think the guy was working for free?

You have, I believe, inadvertently, stumbled on the point.

Someone selling you a car is a............salesman.

Financial advisers want to be considered as "professionals" and share the attributes of professionals. I can't understand how you don't understand this. Your fee is not a function of the client's tax bill, right?

Exactly....... You expect more from a financial advisor consultant than a salesman.

 

[T McGibney]

You have, I believe, inadvertently, stumbled on the point.

Someone selling you a car is a............salesman.

Financial advisers want to be considered as "professionals" and share the attributes of professionals. I can't understand how you don't understand this. Your fee is not a function of the client's tax bill, right?

Is that really true of them all though? A car salesman may count himself as a professional too. Auctioneers certainly do.

 

[Steven Barrett]

Normally I agree with this poster but not this time. Should be upfront on fees, should have been set out in meeting 1, fine for the paperwork to be in meeting 2 as it has to be prepared. Above almost reads like "its in the small print" sotospeak. There should be an openness and clarity on fees, it should be in plain English so that a reasonable person, not necessarily financially literate, can understand.

The fee structure to risk benefits is completely different to that of pensions and investments. It is built into the price, like it is for house or home insurance. The advisor in this case may very well be completely up front with the commission he is being paid at the second meeting when he goes through all the paperwork with the client. The client knows the price of the product already and the commission the advisor is being paid will not alter that. I pay commission on my own protection plans.

This is my opinion also and related to the point I made on an earlier thread today
http://www.askaboutmoney.com/threads/avc-questions.199080/

Why not have non-commission rates like they do in the UK? This ensures complete transparency. For example, is it true that in PHI policies, the standard commission is a flat 30% for the entire term? So, say the premium is €3,000 a year - the advisor is getting €900 each year. This is fair enough for the first year but thereafter I really don't think so.

So are non-commission contracts available in Ireland and if not, the question is why not?

The regulator in the UK banned commissions, so you will have to ask the Central Bank in Ireland why they haven't banned commissions.

There are a number of different commission structures for all risk products. Some income protection plans go as high as 160% of the first years premium as commission (this can be clawedback if the policy is cancelled in the first 3 years). That 30% option is to encourage brokers to ensure that policies stay over the long term (the average term of a life policy is just 7 years). The standard commission for that product is 100% of the first years premium.

There are one or two providers who allow you to reduce commission. The reduction in premium is only quite slight and clients tend not to want to pay the cost of setting up a policy.


Steven
www.bluewaterfp.ie

 

[Steven Barrett]

When you buy a car of course you know the price, just as you know the price of the pension/investment policy you're buying. But will you expect the garage salesman to tell you his own margin or commission he's earning on the sale?

I have lots of clients who import products into Ireland. The margin they make is truly staggering but people are happy to pay the inflated price.

It's all down to what you perceive as value. If you don't think an advisor adds value, you won't use one.

Steven
www.bluewaterfp.ie

 

[Dan Murray]

.

 

[trasneoir]

When you buy a car of course you know the price, just as you know the price of the pension/investment policy you're buying. But will you expect the garage salesman to tell you his own margin or commission he's earning on the sale?

With a salesman, the relationship is nice and clear. He's an intermediary who is paid by the seller, so the customer should beware.
Happily it's easy to buy independent advice from an independent adviser (ie mechanic) who works for the buyer. If he were to receive a kickback from the seller, it would be considered fraud.

Given that financial advice is so much more important than motors, it's a little maddening that we have allowed sellers to muddy the water through legal kickbacks to advisers.
Steven, do the insurers offer commission-free pricing options to facilitate fee-based advice? Failing that, is is possible for fee-based advisers to pass commissions on to the buyer?

Are there any legal safeguards against indirect kickbacks, such as volume-based bonuses? Are they allowed? Do they have to be disclosed to buyers?

 

[Steven Barrett]

For pension and investment clients, I offer clients the choice of fee or commission and show them the difference (higher management fee in the commission option to recoup the payments).

For risk products, I get paid by commission and I tell clients that. I don't offer fee based life cover as reduction in premium is only slight and clients do not want to pay fees for life cover, especially bigger cases that involve a lot of work.

What I am paid is disclosed in the Reasons Why statement, just above where you sign your name.

You can pay back commission to clients but clients have to declare it to the revenue. You also have to remember that as well as providing advice, we are running a business and need to make a profit. I don't see why we should give someone a kickback when you wouldn't ask other people you buy products from?

The volume based kickbacks are largely gone. I don't receive any. Not sure if any of the older firms still do.


Steven
www.bluewaterfp.ie

 

[Dan Murray]

When you buy a car of course you know the price, just as you know the price of the pension/investment policy you're buying. But will you expect the garage salesman to tell you his own margin or commission he's earning on the sale?

It is a disclosure requirement for fees and commissions to be declared

Is that really true of them all though? A car salesman may count himself as a professional too. Auctioneers certainly do.

Are you taking the proverbial? You go to a financial advisor for advice - you don't ask the auctioneer for advice if you're buying - as in, would you recommend Mr. Auctioneer that I buy this house? Do you feel it's aligned to my long-term goals? etc.