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Brokers call for post-retirement trail commission

The majority of members of the Association of Mortgage Intermediaries believe insurance providers should continue to pay trail commission even though the firm or the adviser had retired.

The latest mortgage intermediary census from AMI reveals that 77% of members think insurance providers should pay trail commission even after retirement.

Also, 50% believe insurance trail commissions should continue to be paid when the firm or adviser is no longer authorised by the Financial Services Authority for reasons other than retirement.

The census also found that the majority of members expect the amount of income they derive from insurance commission to increase or stay the same over the next 12 months.

Two-thirds of respondents also stated that 16% or more of their income was generated from insurance commissions, such as, buildings and contents, term assurance, and payment protection insurance.

Members were also asked approximately how many months they would need to receive trail commission in order to recoup the cost of arranging different insurance products.

Term assurance was found to require the greatest amount of time for the costs to be recouped, while building and contents insurance required the least.

The census also asked AMI members about their plans for retirement with the majority of respondents having more than 15 years left until they retired.

Private pensions were found to be the most common plan for retirement while others will remain owner/part-owner but bring in others to manage the business and 18% will sell the business to another firm/adviser.

15% said their insurance trail commissions would provide part of their pension plans with two-thirds of those at least partially reliant on the income it generated, while the other third do not rely on it at all.

Rob Griffiths, associate director of AMI, says: Advising on and selling general insurance products is clearly a key component of our members businesses.

Indeed, 23% of AMI members receive over 35% of their firms income from insurance commissions and this level is not expected to fall in the near future.

Planning for retirement should be a key priority for everyone, mortgage advisers included, and it is slightly worrying to see that 34% of respondents have yet to make plans for their retirement yet.

While most have over 15 years left before finishing work we would urge all mortgage intermediaries to review their situation and consider how they intend to fund their retirement.

The issue of continued trail commission payments into retirement has been a key concern for AMI members recently although our census does show that only 15% are planning to use trail commission from insurance as part of their pension plans.

The vast majority of AMI members are keen for providers to continue to pay trail commission for insurances into retirement, although only 50% believe these commissions should be paid to firms no longer authorised, for reasons other than retirement.


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