Securing the best commission terms in the later life market

Few would begrudge the fact that advisers have to make a living – although I’ve met some that do – but, historically at least, it’s often felt like advisers are in a no-win situation and unfortunately this has not been conducive to growing understanding or indeed fighting off some of the accusations that are levelled at the profession.

Being open and transparent is absolutely vital though, and clearly statutory regulation has gone a long way to clearing up the vast majority of the issues, particularly when it comes to client understanding about what they will be paying and what their adviser is going to get paid.

The sector has sometimes been in the consumer lobby cross-hairs because of some advisers’ predilection for charging large, percentage of the loan, fees although it seems like the industry has moved away from this, with the majority of firms charging fixed fees.

The amount of those fixed fees will vary – it is an open market after all – but every single adviser/firm will have to be very clear about what the consumer is paying, what they are paying for, what they are being asked to pay upfront, etc. All needs to be clearly defined and totally transparent.

Of course, the other part to mention here is around value. What is the client getting for that fee? How are those large percentage-based fees being justified on the basis of getting value for money? Especially when there are large numbers of advisers in the same space charging far less for the same service?

This is an area that is increasingly in the spotlight and rightly so, and firms obviously need to be fully compliant and make sure the documentation is easy to understand and completely explicit about everything to do with fees and charges.

For some advisers looking at an entry into the later life space, the notion of charging adviser fees might be totally alien, particularly if they have been operating in the mortgage space and have only earned income through proc fees and commission.

So, it would be doubly important for them to get this right, but there are also similarities and options that need to be explored for both newcomers and seasoned later life advisers alike.

Making sure you are securing the best commission/proc fee terms is just as important in later life as it is in the mainstream/specialist mortgage sector, and there might be a belief that utilising different clubs and distributors will get you the best terms.

However, we’ve just introduced a service for members which allows them to check the commission rates they receive from later life providers/lenders, and we’ll be able to review and tell them if they could be securing a higher commission in the market. Our own research revealed that, on average, Air members received an average uplift of £341 per case by using us, and we have a tiered structure which means the more business that is placed via the club, the better commission can be achieved.

As can be seen, add up this ‘lost commission’ over the course of the year and you are looking at thousands of pounds that could be added to the bottom line, plus we have a rewards scheme that could also be utilised for either personal or charitable use.

Much like you make sure your clients are completely up-to-date with your fee terms and have total transparency, so we want to do the same in terms of what you currently receive and what you could potentially be getting. It may surprise you and could mean significant extra income for carrying out exactly the same job.