Stephen Cranston Associate editor

Is the craft of independent financial advice under threat? The old-style revenue stream from commission is on the way out. Under SA’s Retail Distribution Review, it will no longer be possible to be paid upfront for a recurring premium investment policy from an insurer or other product provider. In SA, there will be some exceptions at the bottom end of the market as it makes no sense to get an as-and-when fee of R3 a month on a R100 policy. The end of commission will have very little effect on the top end of the market, as most advisers have already moved to a fee-based model. But though it aspires to be a profession, it does not charge professional fees on an hourly rate, instead charging a percentage of assets — known as an ad valorem fee. Phil Young, a UK financial consultant, said at an Alexander Forbes IFA Symposium that in the UK, there had been a very limited move towards hourly fees and, unlike established professions such as law and medicine, there was no correlation between...

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