Fee only advice - treatment of commission

[elacsaplau]

Apologies if this has been covered elsewhere but I couldn't find a similar post!

My dad is considering taking out a sizeable s.72 contract. If we do proceed, we would like to arrange for this on a fee only basis.

My questions are:

1. What advisor fee is reasonable for identifying and establishing the appropriate contract - on a fee only basis?

2. What is the position with commission. In particular,
- are non commission rates available?
- is it legal for commission payments to be refunded to clients (and if yes, what is the tax treatment of same)?

 

[Steven Barrett]

There are only two providers of S72 cover in Ireland. Both have commission built into the contract.

Commission in life cover is a lot different to in investments/ pensions. It has a marginal effect on the price and you would obviously have to pay a fee as well. I pay commission on my own life cover plans.

Commission rebates can be given and they are taxable as income. It is up to you to declare it to the Revenue.

As for the fee, hard to know from outset but there is a lot of work involved in getting a Section 72 in place. You will be looking at a few thousand in fees.


Steven
www.bluewaterfp.ie

 

[elacsaplau]

Thanks Steven - Much appreciated

Great if you have time for a few follow-on questions....

1. What is the commission payment likely to be as a % of the first year premiums for a 75 year old? (I understand that it's a whole of life contract).

2. Just trying to understand the work involved - my dad has just updated his will following collaborative consultations with his tax advisor and solicitor so he knows the amount to be insured. I understand professionals need to be paid for their time but in my dad's case - is it not just a matter of seeing which insurer offers the best price, getting my dad to complete the application form and letting him know of whatever additional underwriting requirements emerge. [In other words, no lifestyle or financial planning is required - simply a product placement service].

 

[Rory_W]

as commission rebate is refunding to you some of the premium that you paid i.e. returning to you essentially part of your own money how is it taxable as income ?

 

[Rory_W]

Thanks Steven - Much appreciated

Great if you have time for a few follow-on questions....

1. What is the commission payment likely to be as a % of the first year premiums for a 75 year old? (I understand that it's a whole of life contract).

2. Just trying to understand the work involved - my dad has just updated his will following collaborative consultations with his tax advisor and solicitor so he knows the amount to be insured. I understand professionals need to be paid for their time but in my dad's case - is it not just a matter of seeing which insurer offers the best price, getting my dad to complete the application form and letting him know of whatever additional underwriting requirements emerge. [In other words, no lifestyle or financial planning is required - simply a product placement service].

Execution only required from the sounds of it so minimal work involved. Fee should be less than 500 euro and covered by any commission and the balance rebated.

 

[Steven Barrett]

Execution only required from the sounds of it so minimal work involved. Fee should be less than 500 euro and covered by any commission and the balance rebated.

1. It's not execution only
2. Have you ever guided a client through a Section 72 policy? There's a lot more to the job than form filling.


Steven
www.bluewaterfp.ie