Practical approaches to commission management

While some people talk of advisers getting astronomical rates of commission there is almost no-one that does, or it happens only very rarely.

High headline numbers often ignore all the parts of the premium that don’t count, or get paid commission at a lower rate. I keep a detailed database of commission terms, and I am familiar with the actual levels of payment, so I know it’s a bit like the top end of the speedometer on my car – a theoretical possibility that has never actually been reached.

This is just one of a number of commission myths. I think my favourite is the line pushed by consumer ‘advocates’ that ‘you should go direct because otherwise you have to pay an agent commission’ – which completely ignores the simple fact, discoverable with about 10 minutes price comparison online, that some of the most expensive offers and ‘direct’, and some of the cheapest are offered by advisers.

So in amongst all the puff and nonsense what is going on in the world of insurance commission and what should you do about it?