Yellowtail Blog

In one of the trade papers Clerical Medical comes under fire for axing trail commission, briefly, a story about Clerical Medical ceasing to pay the ongoing trail commission to advisers that no longer provide a service (I cover trail commission in another blog article called what is commission). Anyone that knows me will understand that I am unlikely to get upset about this decision from Clerical Medical, however after some discussion with them earlier this year this does come as a bit of a smack in the face.  

Why? Well earlier this year we asked Clerical Medical to stop paying trail commission on our clients policies and pension plans. Because of our 100% fee only model, commission, whether paid at the outset or ongoing, was no longer part of our charging regime. We can stop trail commission said Clerical Medical. So to clarify things we asked exactly how our clients charges would reduce. Our thinking was; if part of the annual management charge is simply paid to us, then surely if we no longer received it their would be a corresponding reduction in the level of charges. 

Er, no! Clerical Medical were going to keep it.

A conundrum, what should we do? In the end we found the clients a cheaper product, one paying no commission, and we arranged to switch the contracts free of charge. What a waste of time and effort, and a display of greed from Clerical Medical - an accusation from other advisers following this current action.

Returning to the article; I am dismayed by some of the comments from advisers hitting out at Clerical Medical. One adviser, who shall remain nameless said the following  “The client they have removed my trail from has not done business with me for years but if they asked for advice on financial planning, I would provide it. Will Clerical do that? Will they offer fair, unbiased advice on their with-profits fund, for example, if the situation comes about?”

Morally what right does this adviser have to continue taking money from someone who no longer appears to have a relationship for advice? And why are clients still in the Clerical Medical With Profits Fund? They’ve been taking the trail commission yet not giving advice on a defunct fund. Ignoring a fund that has returned virtually nothing throughout the raging bull markets post 2003 is an admission of abject failure. And that’s what’s wrong with commission!