Advisers Agree Risk Commissions Will Subsidise Future Investment Advice

Almost 70% of advisers in our latest poll agree that risk commissions will subsidise the cost of other financial advice in a post FoFA world.

As we go to print, 69% of those taking part in our poll agree that more advisers will turn to risk commission remuneration in order to compensate for the banning of investment and super commissions from 1 July 2013.  24% disagree with this suggestion, while 7% are unsure.

This outcome suggests the majority of advisers envisage a post FoFA world in which not all financial advisers who have, until now, relied on investment and super commissions, will transition to a fee for advice/fee for service business model.  They appear to support the notion that a proportion of advisers will ramp up their life insurance advice proposition in order to continue to be remunerated by commission payments, rather than adopt the fee for advice model that will apply to all future non-risk advice.

This result seems to reflect a view that, while the principle of fee for service/fee for advice is sound, the reality for many financial advisers across the country is that the implementation of this fundamental change remains a difficult challenge.

As always, we’d like to know what you think…