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Weekend reading: Death to commission edition

Some interesting financial and investing posts I ran across this week, plus a few decent articles from the newspapers.

This week saw the end to a shibboleth that everyone knew was rotten but nobody ever really believed would leave us.

No, not poor Michael Jackson, an amazing singer and a much-maligned weirdo who seems to have been slandered just for being different. The second album I ever bought was Jackson’s rather weak Bad, but to this day I have to dance when his proper classics – Billie Jean, Thriller, Off the Wall – hit the speakers at a wedding.

I’m actually referring to the FSA’s decision here in the UK to finally ban commission paid to supposedly independent financial advisers.

For decades, advisers have been able to recommend investment bonds or life assurance policies to clients then pick up a 5-10% commission from the financial company behind it, dressed up to the client as a cost of investing.

Even worse have been trail commissions whereby advisers have enjoyed 1% of a client’s return on an investment they sold them for decades. Talk about passive income!

Most people never knew they were paying such fees, or if they did they didn’t understand their impact. Even today, I imagine few realize when their pensions are less than they expected or their endowment mortgage fails to pay for their house just how much of their wealth actually went to their adviser.

So three cheers for the FSA for finally banning it. We can only wonder why it took so long?

From the money and investing blogs

Generally UK-related articles from other websites and papers

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