Since 2018, with the application of the new MIF2 regulation, the remuneration methods of financial intermediaries, including the CGP, have changed, for greater transparency. Finally, the mix between the invoice of your CGP fee for complex cases and the free one for others. Everything now depends on its regulatory status.
Independent or non-independent CGP? Here’s the question…
The method of remuneration of a CGP depends on its status: either it is independent or not independent. But independent of what? This independence is regulatory in nature. Compared to financial product providers. During your first meeting with a CGP, the latter must clearly indicate his status, independent or not independent, and explain his method of remuneration. All information is contained in a entry documentthat you should be aware of.
- Non-independent counsel (the advice is based on a limited analysis of the different types of financial instruments and the remuneration is made by fees or commissions on the financial instruments).
- Independent Board (the advice is based on a broad analysis of the different types of financial instruments and the remuneration is based on fees).
The independent CGP charges fees to its clients
An independent CGP should not have a distribution agreement with financial producers, promoters, or others. The independent CGP is strictly prohibited from receiving any remuneration, any compensation from the managers of the financial products. He must undertake to reimburse his client for any commission potentially received when his client subscribes to financial products. This independent CGP, in the sense that he is not interested financially via a commission according to the important posts, will therefore invoice his clients. He doesn’t have a choice. The invoice can be fixed (for example €350 to carry out a complete assessment of the asset) or linked to a number of hours spent, with an hourly rate (for example €100 without taxes per hour). A wealth report must be complete, providing all the details of the current wealth situation (which wealth advice platforms do relatively well), but also specifying the different succession scenarios, impact analysis, risks, everything that the appropriate estate advice. And here, no system, no platform is able to produce, in an automated way, such recommendations.
Independent CGPs represent about 5% of the profession in France. In other countries (especially in northern Europe), the proportion is the opposite. It’s about cultural differences.
The non-independent CGP does not charge anything to its clients, but is remunerated through commissions paid by financial product providers.
The CGP carries out property valuations and provides its advice free of charge to its clients. The latter do not pay bills to their CGP. Customers, after signing their commitment letter and detailing their financial situation, will expect from their CGP a complete financial status. The final phase of this study can go through the recognition of arbitration or the subscription of financial products, or the management acts to be carried out. When subscribing to financial products (most often Life Insurance), the CGP will then receive several levels of commission. The first is usually based on installments. The commission rate depends essentially on the product submitted: the lowest for the euro fund, etc. The second level of commission is recurring. It is based on the exception, a commission based on the annual management fees. The CGP must imperatively indicate to its client the level of commission for each of the recommended financial products.
The various remunerations of a non-independent CGP
Non-independent CGPs may receive kickbacks or commissions based on these fees:
- One-time fees: presentation fees, cancellation fees and relocation costs, structuring, etc.
- Recurring costs: management, advice, custodial, service, financial costs, etc.
- Costs related to transactions: brokerage commissions, entry fees, exchange fees, etc.
- Incremental costs and fees associated with ancillary services: research costs and commissions linked to results.
Can a CGP be independent and not independent depending on their clients?
No, a Wealth Management Board, like a natural person, can only have one status. On the other hand, a company can employ several CGP, with different states and thus respond to all the preferences of its customers.
Does this mean that if you go through an independent CGP, the costs will be lower?
Most often, no, given the fees to be paid. The distribution fees (payment fees or subscription fees) will not only be collected by the same entity, but will be the same. Like the submission of SCPI shares. Since the subscription fees are included in the price of a unit, you will not be able to get a discount on its price. Subscription fees will remain entirely in the manager’s pocket and the CGP will not receive any subscription commission reimbursement. The same applies to management rights relating to life insurance contracts. They will remain entirely in the pocket of the insurer in this case and there will be no payment to the council.
On the other hand, if your CGP has recently become independent, and also receives commissions from the manager, he will pay you. Since the commissions are prohibited from the collection by the independent CGP, the latter must return to its client, every year, in the form of bank transfer. In this case, you will put the commission that a non-independent CGP could be invoked.
Does this mean that the financial product recommendations made may differ between an independent and non-independent CGP?
First of all, before mentioning the products, the CGP, whatever its status, must present an assessment of the situation and the means to put in place to reach your goal. Financial products are only tools to reach this . solution in itself No, the recommendations of the products will not necessarily be different The most relevant financial products for a given client, the objective and the investment horizon will probably be the same. Independents have the advantage of being able to offer a wider range of financial products, some managers who do not allow independent CGPs to obtain all the necessary information, so as not to create distortions of competition in their distribution network.
The CGP can have several areas of intervention. Each of these areas corresponds to a status: Insurance Broker (for example, subscription to life insurance contracts), CIF (Consultant in Financial Investments, subscription to SCPI, or FIP), IOBSP (Intermediary in banking operations, for example underwriting a loan). )… The commissions collected are then the same for other financial intermediaries.
A distinction must be made between commissions linked to payments, which are one-time, for each payment, and commissions linked to balances, based on part of the management fees.
|Types of commissions||The products||Regulatory status||Commission levels depending on the manager|
|Commission/expenses on installments||Life insurance||Insurance broker||Integrity, an incompressible may be imposed by the insurance, for example 0.50%|
|Annual commission on importance||Life insurance / funds in euros||Insurance broker||from 0% to 0.30%|
|Annual commission on importance||Life Insurance / Unit of Account||Insurance broker||from 0.10% to 0.40%|
|Subscription fees/fees||SCPI live||Financial investment advisor (CIF)||from 2% to 6%|
|Subscription fees/fees||FIP/FCPI||Financial investment advisor (CIF)||up to 2%|
|Annual commission on importance||securities account / funds||CIF||from 0.4% to 0.70%|
|One time commission||Real estate loan||Intermediary in banking and payment service (IOBSP)||Up to 1% of the loan amount|
|One time commission||Real estate transactions||Professional real estate card||Up to 10% of the amount of the transaction (maximum legal ceiling applicable from April 1, 2020, especially for the sale of Pinel)|
|One time commission||Consumer credit||Intermediary in banking and payment service (IOBSP)||n/a|
Reminder: commissions paid to independent CGPs must be paid in full to their clients.
CGP and General Agents or Financial Advisors
Investors can also meet with financial advisors. The latter can be salaried or self-employed, affiliated to large insurance groups (AXA, Allianz, MMA, etc.). They are only rarely CGP. His status is insurance broker and cannot prescribe the financial products of the group to which they are affiliated. This is also the case for your financial advisor at your bank. It is an insurance broker when it encourages you to take out a life insurance contract, because a bank cannot be an insurer and therefore goes through partner insurers. This person can only recommend products called “home” (which are therefore not in the strict sense). No independence exists at this level. These brokers (general agents and other financial advisors) are then remunerated on a commission basis, on the basis of amounts paid and amounts outstanding. His affiliate group pays him all or part of the deposit fees paid by the saver, as well as a part of the management fees on the balances. This percentage varies according to the financial products. The account units, not guaranteed in capital, being much more profitable than funds in euros…