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