# Financial Advisor: Fee, Commission?  Confused!



## Prittstick (16 Nov 2016)

I have read the earlier thread ' First consultation with Advisor' but I am still a bit unclear.

Last week,I scheduled a meeting a Financial Advisor (QFA, B.Comm etc). I knew exactly the product I wanted ( and understand the restrictions etc around such a policy).. a S.72 policy for 100,000 cover, to cover potential CAT on an ARF eventually going to adult child. I just wanted a quote for this policy, as you cannot get an online quote for such a policy. I was with the Advisor for 30 mins and he charged me 150 euro, which I was happy to pay. ( we did not discuss any overall Financial Plan etc, as I knew exactly what I wanted)

He has now provided me with quotes from 2 different Life Companies ( Irish Life and Zurich), and the quotes seem fine.

However, he tells me that he will get commission in year 1 of 2,500 and 500 a year for the following 4 years. ( Total 4,500, assuming I kept paying the premiums, of course)

My question is: I thought an advisor was either fee based or commission?  and  if he did get a commission it would be rebated, based on some of the posts I have read here? I do not mind paying an hourly rate for the advisors time but this level of commission seems crazy, for very little work.

I want to take out the policy, but now I've been put off!

I have not gone back to the Advisor, and want to ask here first for any thoughts or suggestions.

Thanks


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## moneybox (16 Nov 2016)

Prittstick said:


> I was with the Advisor for 30 mins and he charged me 150 euro, which I was happy to pay.
> 
> 
> 
> ...



Good grief, great little earner there


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## Protocol (16 Nov 2016)

These extortionate fees are indefensible.

Try a discount broker like www.labrokers.ie

They refund the commission back to you.


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## johnny1234 (16 Nov 2016)

Another sucker with every respect to you. Try AVIVA direct and they'll quote you for what you are looking for. Just read the small print -- every part of it.

These so-called Advisers earn 85% of your first year's premium and are obliged by law to tell you what they earn.


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## Gordon Gekko (16 Nov 2016)

I don't think Aviva do Section 72s...


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## johnny1234 (16 Nov 2016)

Well I'm no broker, thank God, but I have a Section 60 Policy with AVIVA but started with Hibernian 26 years ago. As I said read the small print, every little bit, as if they review your Policy when you get older you could be in for a very rude awakening.


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## Gordon Gekko (17 Nov 2016)

So you have a legacy one. As I understand it, Aviva no longer do them.


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## Steven Barrett (17 Nov 2016)

Zurich and Irish Life are the only two companies that offer whole of life guaranteed premium cover. 

On the commission, that is the price paid by the insurance company to an advisor for setting it up. While this case in question offers a high rate of commission, we also set up policies for clients that are for €10 a month and we get €120, which nowhere near covers the cost of setting up a policy. Or the ones with people with a medical history who get declined, get upset and want to try elsewhere, get declined again. We get paid nothing on those cases. Will clients pay a fee of €2,000 for a policy that was never set up? Very unlikely. 

Steven
www.bluewaterfp.ie


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## johnny1234 (17 Nov 2016)

I have an AVIVA policy which started with Hibernian. In dispute, as per usual, but an error was made in the original paperwork and Aviva are trying to back away from it. Premium increases are linked to the CPI even though I suffer from MS. They are saying when the Policy gets reviewed this term, no longer stands, and I'm saying it's part of the Policy and they are saying NO. I would say the courts will have to determine this as the assured amount is too high to disregard. This is where the small print comes in to play. In fairness, this is not a fault of Aviva but of Hibernian.


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## Steven Barrett (17 Nov 2016)

johnny1234 said:


> I have an AVIVA policy which started with Hibernian. In dispute, as per usual, but an error was made in the original paperwork and Aviva are trying to back away from it. Premium increases are linked to the CPI even though I suffer from MS. They are saying when the Policy gets reviewed this term, no longer stands, and I'm saying it's part of the Policy and they are saying NO. I would say the courts will have to determine this as the assured amount is too high to disregard. This is where the small print comes in to play. In fairness, this is not a fault of Aviva but of Hibernian.



It sounds like you have a unit linked policy that has indexation attached. The level of cover increases by 3%/ 5% each year. The premiums will be reviewed and costed accordingly at the review date. Without seeing the t&c of the policy, I would say you will lose this one. Those unit linked life policies are rubbish, they are very cheap when you are young and the chances of a claim are slim. When you get older and statistically have a greater chance of dying, they are very expensive. 


Steven 
www.bluewaterfp.ie


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## johnny1234 (17 Nov 2016)

Steven, thanks for that. My policy is not indexed linked as was refused at beginning because of my MS. But I was sent an Important Notice by registered Post in 1990 stating all premiums for review would be in line with the CPI. Received this before I received Policy documents.


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## Steven Barrett (17 Nov 2016)

Ahhh, that makes a big difference. Thanks for clarifying that. It will be interesting to see how that is interpreted. 


Steven 
www.bluewaterfp.ie


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## johnny1234 (17 Nov 2016)

As with all Financial Providers nowadays, they will drag everything out for years. Look I have a massive case of Fraud with one of the Pillar Banks where they were ripping people off for years and legacies. Could cost them tens of millions at least.


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## cremeegg (17 Nov 2016)

SBarrett said:


> On the commission, that is the price paid by the insurance company to an advisor for setting it up. While this case in question offers a high rate of commission, we also set up policies for clients that are for €10 a month and we get €120, which nowhere near covers the cost of setting up a policy. Or the ones with people with a medical history who get declined, get upset and want to try elsewhere, get declined again. We get paid nothing on those cases. Will clients pay a fee of €2,000 for a policy that was never set up? Very unlikely.
> 
> Steven
> www.bluewaterfp.ie



When I read the first post I wondered if any of the brokers on AAM would respond, and credit to you Steven for responding and doing so reasonably.

Any business has customers or at least enquiries from people who don't really need or cannot avail of its services. Passing the cost of these on to proper customers is bad management on your part. 

This is a lesson I had to learn in my business. Now whenever I get an enquiry I outline what the customer can expect and what they will have to pay. Many people, correctly or not, think they want a reduced service and a lower cost. My business is not set up to provide that type of service, and I would certainly not charge my good customers to subsidise it.

If you cannot make money on a €10 a month policy, (thats not a criticism  by the way, I can fully understand that your fixed costs may make that impossible) you should not be cross charging other customers to subsidise the 10 people.


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## Steven Barrett (17 Nov 2016)

cremeegg said:


> When I read the first post I wondered if any of the brokers on AAM would respond, and credit to you Steven for responding and doing so reasonably.
> 
> Any business has customers or at least enquiries from people who don't really need or cannot avail of its services. Passing the cost of these on to proper customers is bad management on your part.
> 
> ...



I understand what you are saying and agree. As my business is growing, I am able to move away from unprofitable clients and only concentrate on profitable one. There is an exception: young people who want to start a pension. Pensions are going to be a real problem in the future and I really admire young people who want to start a pension early. They may not be on good money but I will give them good advice at a minimum cost to ensure they don't get gouged by the banks in fees and get poor advice.

On the commission on insurance, there is another thread where all of this is discussed. I am quite happy to discuss these matters, I am always honest to my clients. I am also running a business. 

I pay insurance on my own life cover plan. The commission structure is factored into the price of the product. Does the policy offer good value to you? Do you know the mark up on all products that you purchase? Do you know how much margin a supermarket makes on your shopping? Or your phone provider does on your phone bill? And what level of service do you get off them? Yet no one complains about that...


Steven
www.bluewaterfp.ie


Steven
www.bluewaterfp.ie


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## johnny1234 (18 Nov 2016)

Just to clarify my instance and after talking with my legal advisers last evening, they say there is an onus on the Assurance Co to step up to the mark. Remember, first they denied the paper in question never existed then they changed their minds. If it didn't exist or they wanted to change the terms, they are duty bound to advise the existing policyholders, rather than waiting until the assured have died.


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