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Relatiionship with IFA

Relatiionship with IFA

I have a couple of clients who would clearly benefit from Investment Advice from an IFA. I have some experience of one local firm (who act for another client of mine) and had in mind approaching them with a view to forming a relationship. Is it reasonable and/or normal practice to ask for a referral or split commission? If so what sort of amounts/percentages have others achieved? Is it worth shopping around, both to get the best deal for me and to make a preliminary assessment of capabilities for my clients? 

Any other experiences of managing such a relationship would be greatly appreciated.

Alan

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By dreamcatcher
14th Aug 2012 12:50

What sort of relationship are you looking for a cross referral of clients or one way referral and you receive a fee/commission?

I've dealt with both situations in the past.  In a one way referral situation I pass on to the client 50% of the commission I receive.  That way the client gets something for nothing and hopefully builds up some brownie points and I get something for doing very little.

To be honest I prefer trying to cross refer clients as commission is very much a one off boost to income.  Cross referral hopefully gains recurring fees and word of mouth recommendations.

  

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14th Aug 2012 13:07

Referral

Make sure you pick a good one.  It is also a reflection on you if the advice given is not the best.

If you are ACA or ACCA check with institute re commission as you need to inform clients etc.

Most IFA's will already have a structure in place for referrals any way as they will pick up quite a bit of work from accountants.

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14th Aug 2012 13:49

Pole & Barge come to mind

This is such a risky area I would never get into a cross (or happy!) referral commission arrangement and if an IFA ever sends me a cheque, I knock it off the fee to my client.

Maintaining a good relationship with clients means finding them the best advice based on experience rather than a %.   Similarly, I want someone to refer a client to me because they think I'm well suited rather than because I pay x% for the opportunity.

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14th Aug 2012 14:52

In my experience it's not worth the hassle to try to get "a slice of the action"

You would probably do the client and yourself more favours if you pick an IFA who charges on an hourly basis and rebates the commission to the client. You should explain this to the clients, who will generally be savvy enough to wonder if you are getting a kickback and will be amazed at your transparency and honesty

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16th Aug 2012 17:14

I just expect referrals back

I've never been happy with the thought of making commissions from my client base.  

I hope (and expect) referrals back from IFAs.  

I have two clients who are local IFA's and have often referred clients to them.  One of them has been very active in recommending me to his clients and I've picked up quite a few ongoing client cases as a result.  The other doesn't recommend me often at all - I think it's because he has fewer business clients as he specialises in "old money" type clients who are more likely to be retired.  Needless to say, the first one is the one to whom I recommend most clients as a thank you for all the clients he sends my way.  I'm happy with the IFA earning and keeping his commission and he's happy with me earning and keeping my fees for accounts/returns preparation.

However, there was a particularly juicy case a few years ago where the client was looking to invest a few hundred thousand in pensions - I agreed with the IFA beforehand that I wanted him to waive some of his commission so that the initial charges were less and the amount invested enhanced.  Client was delighted.  It cemented my reputation for both the client and the IFA!  I know some would think I was crazy to give up what was effectively a few thousand in commission, but I value my reputation more.  A long term respected client is worth a lot more than a quick one off easy money!

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20th Aug 2012 22:02

Thanks all

Very useful.

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