I have heard many answers to this one, some of them are un-printable, but in effect an IFA is a type of Adviser who is not tied to any particular product provider. They are able to offer you advice on products from across the whole of the market. To be classified as an IFA they must offer you the option of paying for their services by way of a fee and not just by way of a commission.
Yes. The Financial Services Authority (FSA) describes the two types of advice that you can be offered, as follows:
1. Full Advice – Where clients/investors prefer to have all aspects of their financial affairs cared for by a professional financial planner. Regular reviews are undertaken and a financial planning strategy is closely followed
2. Focused Advice – Those clients that have in the main looked after their own affairs but recognise shortcomings in a particular financial planning area will often refer to a professional financial planner for specific advice on products and/or companies without undergoing a full and long-term review process.
just advice offers both types of advice
Unlike most advisers who elect to receive a commission from a product provider e.g. a life insurance company, the costs charged by just advice are based upon the advice and service you require.
We passionately believe that the cost of advice should be based upon the advice and service you receive and not set by the product providers themselves in the form of commission payments.
Ultimately, you as the policy holder. The commission paid to your adviser is a product charge.
We charge you, as the person who would like advice, a fixed price for a piece of work or chosen level of service.
You can choose to pay the fee by cheque or direct credit transfer from your current account, or if you need to set up a new policy then you can instruct the provider to pay an amount equal to the charge to us.
Our prices are displayed on our web site, www.just-ifa.co.uk, and in our Menu of Charges brochure. By displaying the prices in this way you know exactly how much the advice is going to cost before you even pick up the phone to make an appointment.
Our first meeting will always be free of charge. This allows you to see if you would like us to give you advice and also it allows us to assess how much work will need to be done and therefore be able to confirm the cost of any advice that you may need.
The main reason why we allow payments to be taken from polices is for tax purposes. A payment received from a policy is not liable to VAT, whereas a payment received directly from you is subject to VAT, currently 17.5%. Therefore, by removing VAT you can save money on the charges.
As far as “commission by another name” is concerned there are some subtle but fundamental differences in our approach to receiving a payment for advice
With just advice you are only charged for the services you require. Therefore, this is the only charge for advice taken from your policy. Whereas under the commission system the product provider sets the level of commission which can be paid. Yes, your adviser can elect to receive a lower commission in order to reduce the product charges, but as the commission charge is of a contractual nature it is not always possible to cancel it. This may mean that the commission based adviser continues to receive a commission regardless of the level of service they are offering you.
Whereas, with just advice, you instruct the policy provider to pay the charge for the advice to us. If you are not happy with the level of service you are receiving then you can cancel it.
Our charges are fixed at outset, therefore you have the surety of knowing what it is you are paying for and how much it will cost you.
I am not totally anti-commission, it just that I think the just advice way is fairer and more transparent.
Firstly, we will establish the type of service you require from us. Then we will find out how much commission is being paid and how that affects the product charges.
If the commission can be removed, then we will give you the option to either remove it or to maintain it as you may prefer to pay for our services this way rather than by setting up a payment from your current account, the choice is yours.
If the commission charge cannot be removed, then we will offset our charges against the payments we receive.
If the payments we receive are greater than our charges, then you can elect to have the difference paid to a charity of your choice.