| These days, most people with be familiar | | | | method of paying for the Independent |
| enough with the term to know that an | | | | Financial Advisor's services. Nowadays, |
| independent financial advisor is obliged to | | | | however, the amount of commission received |
| give impartial advice to clients on financial | | | | must be disclosed by the advisor, who will |
| services and products across the board of the | | | | also explain whether that commission is |
| entire financial services market. Most people | | | | deducted from the amount being invested by |
| will also have come to expect that that | | | | the client or whether it is included in the |
| advice is generally offered free of charge. | | | | cost of the investment. Either way, of |
| Perhaps fewer people will be aware, however, | | | | course, the client is effectively paying for |
| that although clients can indeed choose to | | | | this commission. This puts a rather different |
| receive "free" they can equally well choose | | | | slant on the concept of "free" advice; Fees |
| to pay a fee for it. Why pay a fee for a | | | | paid directly to the Independent Financial |
| service that is otherwise offered free of | | | | Advisor - although this arrangement is still |
| charge? The answer, of course, lies in the | | | | probably less usual, it is an alternative |
| fact that the Independent Financial Advisor | | | | that must be offered by the advisor. The |
| also has to make a living. Good, professional | | | | actual fees charged will, of course, depend |
| and expert advice does not come entirely | | | | on the amount and type of investment being |
| "free". If it is provided free of charge to | | | | made and how complex is the advice needed. It |
| the individual client, therefore, the advisor | | | | can prove cheaper than paying a commission |
| covers the cost of that advice by taking a | | | | and the client can be entirely reassured |
| commission from the provider of those | | | | about the objectivity of the advice, without |
| financial products he sells. There is nothing | | | | worrying that the advisor is somehow |
| intrinsically wrong or underhand in such an | | | | influenced by a commission he could earn from |
| arrangement, but many will argue that it is | | | | a particular provider. Commission and fee - |
| important for the consulting client not only | | | | thanks to the transparency of the |
| to be aware of the fact, but also to have the | | | | relationship between advisor, client and |
| option of paying the Independent Financial | | | | providers, it is also possible to have a |
| Advisor directly for his services. In this | | | | combination of both commission and fees. This |
| way, the client can be assured that there is | | | | breakdown of the actual cost of the advice |
| absolutely no way that the advice can be | | | | being provided by the Independent Financial |
| influenced by the prospect of an advisor's | | | | Advisor makes it much easier for the client |
| commission on what is being bought. Since | | | | to compare the real profitability of any |
| July 2005, therefore, the regulatory body - | | | | chosen investment decision. |
| the Financial Services Authority - has made | | | | |
| it a condition that all licensed Independent | | | | Sean Horton is a Director of Enhanced Wealth, |
| Financial Advisors must give their clients | | | | a whole of market mortgage broker and |
| the choice of paying a fee for their advice. | | | | independent financial advisor specialising in |
| Therefore, the advisor has three ways of | | | | mortgage advice and the associated areas of |
| earning his professional fees: Commission | | | | income protection, mortgage protection, and |
| from the provider of financial products - | | | | mortgage life cover. |
| conventionally, this has been the most usual | | | | |