Do financial advisers get commission?
Commission can still exist in some areas such as mortgages and insurance. It is not permitted as payment for pension or investment advice.
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Pensions and investments
For new retail investment advice, the FCA adviser-charging rules require an agreed adviser charge rather than provider commission. This covers relevant pension and investment advice. Some historic arrangements have different treatment, so ask the firm to explain any older commission shown on your statements.
Mortgages and insurance
For certain mortgage and insurance products, advisers or brokers can receive commission from the provider. Some may also charge the consumer a fee.
You should know how the adviser is paid
An adviser should explain how the advice is charged and paid before you commit. If commission applies, understand whether you are also paying a direct fee.
Payment method is not the only comparison
Compare product scope, service, adviser restrictions and total cost. A service with no upfront fee can still have economic costs built into the arrangement.
Identify the activity before interpreting the answer
Commission rules are not identical across every service people call financial advice. For new advice on retail investment products, adviser charging replaced product-provider commission. Protection and mortgage arrangements can involve commission, and older contracts may have legacy payments. Ask which category your engagement falls into.
Do not confuse a provider deducting your agreed adviser fee with the provider funding a commission payment. Both can appear within the administration of a product, but the source and basis of payment differ. Ask the firm to identify who pays, the amount and whether the payment continues.
Also separate commission from independence. A firm's advice scope and its payment model answer different questions. Neither a no-commission statement nor a fee invoice establishes that the firm considers every relevant option.
Questions to ask when a payment is involved
Ask whether the payment is included in a premium or product cost, whether you also pay a separate fee and whether cancellation can create any charge to you under the agreement. Request the applicable terms before proceeding. Avoid assuming that a payment received by a firm is refundable to you or that you owe a clawback without reading the contract.
For an illustrative protection discussion, compare the policy's cover, exclusions, premium and adviser service alongside the payment arrangement. A policy with a lower premium but an unsuitable definition of incapacity is not made appropriate by a different commission structure.
If an existing investment contract carries a legacy payment, ask what service accompanies it and how it affects the total cost. A proposal to replace that contract still needs to consider its benefits, charges and any consequences of moving.
Use disclosure to make a better comparison
Ask the firm to put the answer in writing and retain it with the quote. If several activities are being provided, request a separate explanation for each. A combined retirement and protection conversation may contain more than one commercial arrangement.
The important outcome is that you can distinguish your direct fee, product charges and payments made by other parties. That makes it easier to assess incentives and compare services without treating commission as a universal description of how all advisers operate.
