What does the term "broker" mean to people?

[Yellow Belly]

You can't dismiss the customers failure to shop around. Should the banks not try to leverage every advanatage and profitability they can.

Is it any different to people failing to shop around from Eircom, NTL, etc. Also failure of the competition, to capture these customers?

Many competitors cannot "capture" these customers are they cannot access them. The financial regulator effectively banned cold calling so either clients are referred to a competitor or shop around themsleves the competition have almost zero chance of outlining their case to these customers. The fact that they have a current a/c with the bank makes them fair game for the bank advisor- I mean sales person.

The net effect of this in the real world is thousands of people with financial products which could/can be purchased on a more cost effective basis elsewhere but they don't even know it!

 

[mathepac]

... How many people would be prepared to pay a fee for their financial advice in lieu of commission? ...

No issue, provided some protection for the client is built in to avoid misselling / misrepresentation of products at the point of sale or subsequently.

... Do people realise that it often costs the same to deal directly with an institution as it does to use a broker- be they multi agency intermediary or authorised advisor? ...

Yes commissions are paid to tied agents / staff for sales similarly as to brokers, in fact tied agents / financial institution staff have sales targets to meet.

 

[AlbacoreA]

Many competitors cannot "capture" these customers are they cannot access them. The financial regulator effectively banned cold calling so either clients are referred to a competitor or shop around themsleves the competition have almost zero chance of outlining their case to these customers. The fact that they have a current a/c with the bank makes them fair game for the bank advisor- I mean sales person.

The net effect of this in the real world is thousands of people with financial products which could/can be purchased on a more cost effective basis elsewhere but they don't even know it!

Why can they not reach them through the traditional mean of advertising, like any other product?

If people don't shop around, thats their own fault.

 

[Askar]

This is an interesting article, which confirms my own views of the value of brokers
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5775156.ece

It appears that even whole of market brokers in the UK are guilty of shenanigans.

The consumer should be empowered to shop around with price comparison websites/papers (such as the best buys on this website). A basic financial education at secondary school level is all that is required. There should be a mandatory home economics course teaching this and basic budgeting. Indeed, why not give a QFA type diploma for those who pass it.

 

[Bronte]

I recently went to my Irish bank to open a new current account. I was in a hurry and it would have been my only visit to the bank in a year. Plus I had kids with me. The front desk told me I had to have an appointment with my 'special relations advisor' to open an account. I said is this a bank, all I want to do is open an account, I do not need to meet anyone, I already have many accounts etc can you just open an account for me please. I was a bit more irate than this because really to open an account (I had ID, addresses paperwork etc) in a bank you are a long term customer of should be say 5 minutes. Anyway she must have realised I was irate so she got out the form, no kidding I think it was about 10 pages. Anyway I said what bits do I have to REALLY fill out. She objected saying basically the whole lot (they train them well on this) and there were rules etc about cheque books, bank cards, income etc. I filled it out in 1 minute flat, ignoring most of it, said you know all my details and about 1 week later I had my new account. This 10 page form is not for my benefit, it's for the bank to know everything they possible can about the customer's financial situation so they can target me for pensions/savings/life insurance/funds etc. They are getting slicker at getting the information and I'm sure they are getting better at selling their products. I also learnt something new, they won't open accounts for everyone, apparently you have to have an income or something but maybe I misunderstood this bit.

 

[NorthDrum]

Because brokers (I mainly speaking for life, Investments and pensions brokers) have a strong relationship with Life Companys and Investment firms they can negotiate better deals (higher allocation of investment, shared comission on Life policies).

If you feel that you can do a better Job then them then do it, but theres nothing to stop you going into a brokerage with your information and seeing if you can negotiate a better deal for yourself.

This is called "execution only" service. You decide what cover you want, who you want to take it out with and let the broker process your application. In return the broker shares the commission. Its a win win situation really. Broker gets paid for simply sending in your application form, client knows that they have gotten the best deal in the market and they have gotten some money back or savings, then if they simply went in off the street.

You will seldom get a better deal going into a life company or Bank off the street. Its kind of like how in Musgraves you would get better value for money then you would by buying goods in your local shop. Life companies do not want (generally) to undercut brokers (who are a major part of their marketing network).

You dont have to like brokers to do business for your own benefit . . .

 

[Yellow Belly]

I recently went to my Irish bank to open a new current account. I was in a hurry and it would have been my only visit to the bank in a year. Plus I had kids with me. The front desk told me I had to have an appointment with my 'special relations advisor' to open an account. I said is this a bank, all I want to do is open an account, I do not need to meet anyone, I already have many accounts etc can you just open an account for me please. I was a bit more irate than this because really to open an account (I had ID, addresses paperwork etc) in a bank you are a long term customer of should be say 5 minutes. Anyway she must have realised I was irate so she got out the form, no kidding I think it was about 10 pages. Anyway I said what bits do I have to REALLY fill out. She objected saying basically the whole lot (they train them well on this) and there were rules etc about cheque books, bank cards, income etc. I filled it out in 1 minute flat, ignoring most of it, said you know all my details and about 1 week later I had my new account. This 10 page form is not for my benefit, it's for the bank to know everything they possible can about the customer's financial situation so they can target me for pensions/savings/life insurance/funds etc. They are getting slicker at getting the information and I'm sure they are getting better at selling their products. I also learnt something new, they won't open accounts for everyone, apparently you have to have an income or something but maybe I misunderstood this bit.

Spot on Bronte- the banks modus operandi is what they call "profiling" where they know so much about you that they can then pin point what products they can SELL you.

It used make me laugh how many people were contacted by their bank teling them that they were getting a poor return (from the same bank!!!) on their deposit account & that they would now "advise" them to switch to a capital guaranteed tracker bond (with no guaranteed return bar capital sum). The only benefit in this was the hefty commission & charges which said same bank were going to make- why didn't the bank contact these customers & say you are getting a poor return so now we are going to add 1% to your deposit rate?

This was wholesale in the banks and still goes on today. Can people really not see what they are doing when the sign up for these bonds?