'Independent' Financial Advisers' True Level Of Independency . . .

trajan

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According to the Central Bank, there is no public register than shows which financial advisers are tied-agents, multi-agent intermediaries or independents.
Neither is there any requirement on independent advisers to equalize commissions on comparable products so as to minimise the moral hazard in choosing between a policy with more commission and one with less.
This is nutty to me, as any adviser will be tempted to recommend the policy/pension that offers the greater commission where the benefits are much the same as those on lower commissions.

Independents are required however to display a schedule of fees in their office and on their websites.

There does not seem to be any definite scoping of independents' range of product scanning beyond that they will scan all products officially promoted in Ireland by their providers.
So if an 'independent' adviser also scans products from EU, NA or Far East he does so only towards his/her own benefit, i.e. if commissions are higher and/or if the client pays them for the extra product surveillance.

I've heard it said that sometimes independents may offer to share commissions on products taken out by their clients with such clients. But I see no note of this on their websites.

I'm also a bit confused by the designation, CFP.
Apparently, independents need not be CFPs - and ordinary QFA and LIA will do - and CFPs need not be independent.

Financial advisory services are crucial to obtaining the protections most suitable to one's situation. But it still looks like there are very few stay-bars on what they need to do to be truly independent.
 
There are new regulations coming out in January which will address some of these concerns.

An adviser will no longer be able to receive third party payments for investment products and call themselves independent.

The rules on soft commissions (inducements such as paying for flights to New York) will also be tightened up and advisers will have to be able to explain how these inducements benefit their clients.

So a training conference would still be ok but a round of golf not.


Marc Westlake CFP,APFS,TEP,QFA
Chartered and Certified Financial Planner and Registereed Trust and Estate Practitioner

independent Financial Adviser
 
That's good news, Marc.
But . . . while they may be prevented from using the word 'independent' before the words 'financial adviser', they may well skilfully insert it into their website blurbs so as to create the impression in the minds of innocent readers that they are IFAs.
My concern is that if the IFAs are denied commissions - or part commissions - then the cost of financial advice is going to go up by many IFAs.
Many IFAs already sport an income model like so:
1. Fee for the client's financial plan, research and advice services.
2. Commission on a product arranged for the client it was recommended to.
3. Administration charge for completing paperwork on client's behalf.
4. Monthly/annual retainer to monitor client's investment portfolio and general situation.

Websites of IFAs often quote administration charges of ~ €75 per task.
I find this very dear for just basically completing policy or pension scheme forms.
(Can a client step in here and say he'll do his own form completion ? Or would this nullify the IFA's claim for commission ?)
I am sure that the administration Marys who actually do this work aren't paid this amount for their labours :rolleyes:.
 
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