EU regulation closes advisor pay loophole (for now)

Financial advisor payments are restricted in France, but still check your advisor thoroughly to ensure that he is appropriately qualified and authorised

In the financial industry, questions such as ‘How do you earn your money?’ can discomfort many but anyone running an honest business will be confident that they offer excellent value and feel at ease discussing it.

As an overview, a typical financial advisor will charge 1-2% per year of the assets they manage as charges (even if fee based). I see anything around 1% as reasonable – but only as long as there are no hidden inducements.

The industry has a history of finding ways to apply hidden charges. Thankfully, now, it is impossible for locally regulated institutions and advisors to do so, such is the force of regulation.

However, one of the last remaining practices, open to abuse worldwide, including most of Europe, is fund managers’ ‘marketing payments’ to the advisors and financial institutions that recommend them. These ...

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