The fact that everyone pays for financial advice is still woefully misunderstood in the UK.

Thankfully this will be coming to an end on 1 January 2013 when commissions as we know them will be banned and fees (or agreeing a fee charge) will become compulsory.

Consumers are still blissfully unaware that the commission culture that is slowly dying out never meant that the advice they received was free. Research regularly compiled by various sources shows that consumers still largely believe financial advice to be free.

Aside from the fact that the commission has always been funded from the premiums you pay or the investments you make, there remains the truism that ‘there is no such thing as a free lunch’.

Even if advice were completely free and the commission paid to your adviser was nothing to do with you and the products you have purchased, do you honestly believe that the adviser would be completely unbiased when Product A pays £2,000 commission and Product B pays £1,000 commission?

The truth is that wherever commission is present the temptation for bias is not far behind. I think that is human nature.

If, on the other hand, you agree to pay a fee for the advice you receive and there are no commissions anywhere to be seen, then your adviser has no choice other than to be on your side, and recommend what is genuinely right for you.

After all you work for the person that pays you, do you not?

If your adviser is paid by a product provider who are they genuinely working for? If your adviser is paid by you to advise you, who are they now genuinely working for?

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Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on