In its Mortgage Intermediary Census, two-thirds of respondents also stated that 16 per cent or more of their income was generated from insurance commissions, i.e., buildings and contents, term assurance, payment protection insurance, etc. 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 per cent will sell the business to another firm/adviser.
15 per cent 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.
AMI also asked members if they believed providers should continue to pay trail commission for insurances even though the firm or the adviser had retired. A large majority (77 per cent) felt it should. Fewer respondents (50 per cent) believed insurance trail commissions should continue to be paid when the firm or adviser was no longer FSA-authorised, for reasons other than retirement.
Rob Griffiths, associate director of AMI, commented: “Advising on and selling general insurance products is clearly a key component of our members’ businesses. Indeed, 23 per cent of AMI members receive over 35 per cent of their firm’s 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 per cent 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 per cent 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 per cent believe these commissions should be paid to firms no longer authorised, for reasons other than retirement.”
