Commission Views and Critics

Critics have long argued that this resulted in a potential conflict of interest for advisers, who might be tempted, or appear to be tempted, into recommending products according to the commission they earn rather than what is suitable for the client.Financial advice is not cheap, but in many cases it’s a must. You are most likely to need to pay for professional financial advice when considering share-based investments such as unit trusts, a pension, mortgage or a protection productAs the saying goes, there is no such thing as a free lunch and there is certainly no such thing as free financial advice.

The vast majority of investment advisers work on a commission rather than fee basis and whilst you do not physically write out a cheque for the advice, you are paying for it out of the investment plans/policies you buy. You may be paying too much.

The argument against commission is that it may cloud an adviser’s decision making and can place far too great an emphasis on selling products rather than giving sound financial planning advice. If a commission-based adviser doesn’t sell you a financial product, he or she will not earn a living. This can lead to conflicts of interest and exploitation by some of the more unscrupulous operators in the financial services industry. There are some excellent commission-only advisers but equally, there are some very poor ones.

Commission and confusion go hand in hand and we would like to take this opportunity to talk you through some of the ways that you might, wittingly or not, be paying commission to an adviser.