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With less than a year to go until it is banned outright, almost a fifth of advisory firms remain entirely reliant on commission, research suggests.
A poll of 465 advisory businesses, carried out by support provider Aim Two Three between October and December last year, found 19.9% of firms are still 100% commission based.
Just 8% of the firms were operating on a pure fee basis, which Aim Two Three defined as those whose clients pay for their services by cheque.
Perhaps reflecting the support packages on offer, the survey results suggest network members are making better progress moving away from commission, with 15.4% still operating on this basis.
David Ingram, founder of Aim Two Three and a vice president of the Personal Finance Society, was cautiously optimistic about the progress being made.
"The bulk of firms have mixed sources of remuneration spread across fees, commission and commission offset," he said.
"This is indicative of real progress towards adviser charging although, at this point in the process, the fact that almost 20% of our respondents still rely totally on commission is a cause for some real concern."
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Statistics and reality
So according to this research, 80.1% of firms are not reliant on commission. It isn't clear from the article however how many of the sample will either cease to operate after 1.1.13 or will only advise in areas where [confusingly]commission will still be allowed. So without being too ascerbic, what was the point?
Posted by: Duncan Carter
Clarity
No, our research did not suggest that 80 percent of firms were now operating on a fee only basis. Our research identifies that almost 20 percent of firms are still earning 100 percent of their income from commission. The vast bulk of the rest of the firms which responded to the survey report that their income comes from a mix of commission, fee and commission offset. those are the firms which are, it would seem,, on the move to a pure fee model. I hope that helps!
Posted by: David Ingram
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Flawed
I think this research is flawed. Are you telling me that 80% of advisers are fee based. I don't think so. You only have to look on the internet to see most firms are still commission based. Selective reporting I detect. But of course, if you assume that to be Independent you have to have a fee only route option then you might have a point. But I guess thats not what the article is about.
Posted by: Swanny