I was quoted in an article today exploring one of the downsides of the regulatory changes introduced just over a year ago following the Retail Distribution Review (RDR).
The concern I expressed was that some financial advisers are avoiding communicating with their clients, for the cynical purpose of maintaining their flow of commission income.
One of the most positive changes introduced by the RDR was the abolition of commission on the sale of new investment products.
This did not however automatically apply to ‘trail’ commission paid out of annual charges on investment products sold before 31st December 2012.
These legacy products and the new commission rules created a perverse situation where the delivery of any advice would switch off the ongoing commission payments, whereas no advice would result in the adviser continuing to be paid.
You can see the reasons for my comments in the Daily Mail, that some people haven’t heard anything from their existing adviser.
Trail commission being paid in return for no ongoing service is something that is being addressed by the regulator and hopefully, in time, advisers will only be paid when they deliver an ongoing service.
For now, if you are paying trail commission out of investment product charges, you have a reasonable expectation to hear from your financial adviser.
We think your financial adviser should get in touch formally at least once a year; offering a comprehensive review of your financial plans and updating these accordingly.
In addition this annual review, you should expect to hear from your financial adviser on a regular basis.
Here at Informed Choice, we issue a weekly email newsletter which is available to all clients. This contains the latest personal finance news and is designed to stimulate discussion.
We also produce a monthly Investment Update report which is available to download from our website and sent to clients who have expressed an interest.
Within this monthly report, we comment on the state of the global investment markets and describe the latest performance of the various investment asset classes we recommend.
Throughout the year we publish occasional briefing notes, covering topics including the Budget statement.
We also of course post blogs on this website each day, making sure that our clients and professional connections are kept well informed.
If you do not hear from your financial adviser on a regular basis, you might start to question why you are paying them on a regular basis. Could those product charges which fund trail commission be saved or better spent on the receipt of a better service?
