This is where the independence comes into play combined with the performance fee based system. With a performance fee based system, there is never a question of which product pays the best to the advisor, only what is best for the clients needs. Since the performance based system do not pay out any commissions upfront the risk of being "sold" a product that only benefits the advisor is taken out of play.
Do we work for free?
Off course not. With performance based charge there is a share of profits. When you as a client is making a profit the product company will charge a percentage of that profit as his payment. Our part comes out of his share. This is a important difference to the traditional way of charging i.e upfront fees, admin fees, yearly fees who all charge your investment regardless of result. How can anyone expect a good result when it really dosen´t matter what the performance is. The fund manager/bank get´s paid if the fund goes up as well if it goes down. Is it fair to charge a payment when the fund is going down in value? Would you pay your car mechanic in full if he is doing a bad work? Off course you would not, but why are most of us quite happy to pay our fund managers/bank even when they are not doing a good job. Isn´t time for a change in the way we invest and how we pay for our financial services? We think so.