Comments on: Weekend reading: Death to commission edition

By: Rob

Rob — Wed, 01 Jul 2009 19:15:58 +0000

The FSA did call back.
It seems that it is content for the main platforms to continue as they are, taking a share of the amc. It argues that because platforms don’t offer advice there is no problem in that.
Ideally though it would prefer all platforms to migrate to the Transact model where there is a cash pool and the platform takes its fees from that on the basis agreed with the adviser.
This issue could be a major stumbling block because unless a fund is on one of the major platforms used by the networks no one buys it.
Transact is OK, but most ordinary IFAs don’t use it.

By: The Investor

The Investor — Wed, 01 Jul 2009 08:26:06 +0000

Thanks for sharing that Rob. Please do come back and let us know what the FSA says.

Congratulations on the recent outperformance of the Fund, too.

By: Rob

Rob — Tue, 30 Jun 2009 20:51:47 +0000

The FSA document fails to address the huge issue of how commission via platforms will be dealt with. When I phoned and queried this they said they would get back to me.
What the proposals will do is remove lots of small IFAs from business leaving the industry even more concentrated in the hands of the banks and the networks who are, IMHO, far worse than the small local IFA because they just sell what they are told.
The proposals do not deal with other incentives, such as corporate outings for IFAs and training courses. These should be disclosed by the agent so that clients can see what influences have been at work.

By: The Investor

The Investor — Mon, 29 Jun 2009 23:12:55 +0000

Indeed. I think commissions are a relic of a more deferential era, when people just did what they were told and believed ‘professionals’ would do what was best for them. It’s easy to forget how much the world has changed in the past 20 years.

By: Graeme Pietersz

Graeme Pietersz — Sun, 28 Jun 2009 00:21:23 +0000

My reaction was exactly the same (see my recent post). You make a very good point about most people not knowing about trail commissions – I suspect many people also do not realise how large the initial commissions are either

No-one other than the FSA and IFAs actually seems to have thought this was a good idea.

By: ObliviousInvestor

ObliviousInvestor — Sat, 27 Jun 2009 11:25:22 +0000

Wow! Being in the U.S. I’m was unaware of such legislation.

But that’s fantastic for investors. If only we could follow your lead…