Letter: Financial advice

Sir: Andreas Whittam Smith ("Wanted: financial advice that is genuinely independent", 12 August) devotes the first half of his article to his misgivings about the working practices of some major financial institutions, but concludes that independent financial advisers are of little or no merit. It is precisely because the plethora of insurers and investment management groups can present themselves and their products in a "charismatic" way that a need exists for independent financial advisors, who can differentiate between fact and good copy.

Mr Whittam Smith's assertion that independent advisers select products on the basis of the amount insurers will pay them in commission is insulting and incorrect.

Recently introduced disclosure rules now require that clients be made aware of the commission payable on all of the regulated financial products. As clients have the opportunity to shop around, those few advisors who may be commission-driven will soon find that they are losing business to more professional and cost-effective advisers.

Some years ago the insurance industry itself did propose maximum commission agreements between the insurers/institutions. The Office of Fair Trading deemed it "anti-competitive" and banned it.

Many independent financial advisers offer to work on a fee basis. However, most clients are unwilling to pay for this service, particularly if no subsequent business is transacted.

GRAHAM POGSON

Independent Financial Adviser

London SW13