News Article : It seems that the independent broker is on a hiding to nothing
|Category:|| Advisers & Brokers : Commission & Fees|
|Author:||Edited by ITInews|
|Posted:||15 May 2006|
We need to really have our views heard or the independent will largely disappear
All this talk on how much we earn. What a lot of rubbish!
We recently inherited a Brokerage from a colleague who died. When the dust settled there were three of us in the CC (two brokers and a secretary). I had been running my own business for a while on an ‘as and when’ commission basis so I took a third of the clients and went back to my original business.
Our agreement was to get the companies to spilt the clients so we could all benefit from all the future (renewal and second years) commission. They could not accommodate us. Our choices were:
- Leave things as they were and at the end of two years they were to pay me out minus the lapses, or
- I could get new ‘brokers appointments’ signed and the clients would be moved across minus commission – the companies would keep it.
So we went with the first option. Needless to say I never received any commission which was between R150,000 and R200,000.
The real problem here is, when one comes across a new client and obtains a “Broker Appointment”, we take on all the responsibility of servicing of that client. How are we going to be remunerated because the commission either will continue to the old broker (the balance of the first two years commission) or the company (all the future update commission)? Once again we end up working for nothing.
After getting a package from a company I started my brokerage 4 years ago. I selected the ‘as and when’ system up when I started. It has cost me around R400,000 at least in funding myself 'till now. Most clients don’t want to pay for our service and a large amount of work is done for nothing.
Inheriting a client base has been a blessing and a problem. On the one hand it has helped getting our business off the ground but on the other hand clients are used to having things being done for nothing.
We see a lot of what is being done wrong in our industry in the press, but little about what is being done right or that clients should be preparing themselves for paying for our services. After 26 years in our industry I don’t feel that the majority (+-70%) of clients are ready for fee-based advice.
We need to really have our views heard or the independent will largely disappear as they have overseas.