Mrs Nelson wrote: ↑
Fri Nov 03, 2017 11:42 am
I get it, It’s like the estate agents,
You don’t pay them, their service to you is free, and they get paid by the builder who has added a ten percent imaginary hike to ones house.
We came here on a big boat, but it wasn’t a bannana boat.
No, it's nothing like estate agents because the details are totally transparent, just for a starter.
The commission paid to advisers forms a minute percentage of the overall premium, and in some cases is spread over the lifetime of the policy. The insurance/investment companies do, in many cases, pay a lump sum commission to an adviser, but it is in effect a loan to the adviser and assumes that the client will maintain payments, certainly for two or three years. If they don't, the companies will claw back the commission or a proportion of it.
But you need to take into consideration that an adviser may have invested many days in preparing his advice to a potential client, and if they are paid by commission only and the client chooses not to proceed, then that time goes unpaid for. No difference to you going to a gig, spending an hour or two setting up and then the bar-keeper tells you to pack up because they have decided not to provide entertainment that evening, and as you hadn't performed, he wasn't paying you anything.
I used to charge fees upfront; my initial fee was a minimal £500 for attending a first meeting which a potential client would be informed of when making the appointment. Stopped time wasters.
After that, most of my clients paid an hourly rate for all work that was conducted originating from that meeting, and that work could sometimes take a week or more to complete because it often involved highly complex arrangements. A company pension or a retirement plan structure for high net worth individuals are not things that can be done in an instant, when you could be dealing with commercial properties, banks, lawyers, setting up complex trusts let alone all the paperwork that needed to completed. And making sure that it was all conducted in a totally legal manner.
Anybody can be an estate agent; I was required to be qualified to talk to my clients about these matters, and I needed to have working knowledge of many different areas such as tax, law, trusts and much more as well as having a thorough understanding of all the financial instruments that were available.
And I am still welcome in all my former client's homes. Not something that can be said about many estate agents.