Everyone has to live. It's not even an open secret anymore, it's so obvious: in order to be paid for the excellent advice you get from your financial intermediary, whether it is your banker, a broker or a non-independent CGP, commissions are paid to him paid by the insurer of your contract, depending on your outstanding amounts on the various media invested.
Big steps towards transparency …
More and more financial intermediaries publish the amount of their commissions. From January 1, 2018, this will be mandatory. Direct impact of the application of European MIF2 regulations, independent CGPs will even have to commit to paying their clients all of the commissions received, in order to respect their total independence from the contracts and media recommended. The revolution of independent financial advice is underway …
These famous fees on payment
When they exist, payment fees are largely passed on to your financial intermediary. Generally, by the way, the latter does not hide it, and you are openly indicating it. Especially since you try to trade them down each time, your intermediary will tend to retort you: “I must also live …“. The insurer can impose a minimum fee percentage (1% most often), so that the intermediary does not try everything for everything. In such cases, the insurer will keep 0.50% of the fees on payment.
But that's not all. Your intermediary will receive commissions throughout the life of your contract, on the outstanding amount. The commissions vary according to the media invested. However, if you can negotiate the payment fees, the management fees are non-negotiable.
Euro funds earn few commissions
It’s obvious. Since 80% of the funds placed in life insurance are invested in funds in euros, the commission paid by the insurer will be low. In fact, the latter also does not have much room for maneuver to generate profits, yields going down for more than a decade … Your intermediary will therefore have little interest to encourage you to invest in the euros fund, because the insurer, for its part, will have none. The commission on outstandings will be 0.10% for a classic euros fund, significantly more for a dynamic euros fund, because the returns are much more uncertain.
Your account units partially finance your intermediary's commissions!
Unsurprisingly, your contract insurer has more leeway over units of account to generate returns and therefore profit. It will therefore naturally be in your interest to financially encourage your intermediary to recommend investment in units of account. According to insurers and units of account, these commissions vary between 0.60% and 2% of outstandings, well beyond the management fees alone. Part of the return on your unit of account, which you do not receive, is therefore used to compensate your financial intermediary.
So what ? How to pay less commissions to receive more returns?
The only alternative for an investor to choose an independent CGP. On January 1, 2018, the latter will in no case receive a commission from the insurer. He will then have to pay it back to you, if the insurer cannot act differently towards your intermediary.
But let's remain consistent, how can this independent CGP be paid? Advice, recommendations from several competing contracts to allow you to choose independently, the independent CGP will have no alternative but to operate on the basis of billing for advice. It will therefore be up to the saver to arbitrate between an independent CGP, by paying advisory fees (for example, € 350, for annual asset monitoring) and its financial intermediary (non-independent CGP, banker, broker) for which its investments will indirectly pay commissions.