Rethinking adviser remuneration
But in a business where there is some scale, employee advisers, other shareholders, and so on, the question of how your advisers get paid is becoming increasingly important.
The problem, especially in the spotlight right now, is to demonstrate that how the adviser gets paid is not creating an intolerable conflict with the interests of the client.
While most new clients are happy to hear that the product provider is going to pay a commission, meaning that they will not have to pay a fee, their views can change pretty quickly when problems come up. If there is some sort of dispute, or worse, a claim not paid, pretty soon the customer will become very interested in whether or not commission may have had an effect on the advice given. If the idea doesn’t occur to them on their own, someone will surely raise the question for them.
Assuming commission remains part of the landscape for some time, how do you demonstrate that the commission payment did not have a direct effect on the advice given?
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