July 21, 2015
Advisers in the Findex Group have begun using a commission-free risk product to deliver fee for service insurance advice to their customers.
Utilising BT Protection Plans’ existing adviser service fee feature, representatives of Centric Wealth and Financial Index Wealth Accountants are able to deliver commission-free life insurance advice. The product allows advisers to dial down commissions to zero, if required, substituting an annual, transparent administrative service fee, while providing a net premium for consumers. Findex estimates that the product could yield client savings of up to 30 per cent, depending on the individuals’ circumstances.
The advice group has confirmed that advisers and clients can negotiate the fee the client pays, relative to the work that needs to be done by the adviser and the size of the premium.
From 1 July, according to Michael Wilkins, Chief, Adviser Services at Findex, all new life insurance policies recommended by Centric Wealth and Financial Index Wealth Accountants representatives will be free from commissions. Mr Wilkins said where an alternative product is deemed to be more suitable for the client, the group will utilise its own revenue collection model, where the client will pay Findex an agreed fee for service and the commissions will be stripped out of the premium.
We were concerned about the futility of high commission products in that they simply encourage churn
“Over time we are confident that all major suppliers will be able to move to a commission free/fee for service model. However, we will use our own collection model in the interim so as to ensure the best interests of our clients continue to be met,” Mr Wilkins said.
He explained that while the Findex group had been looking for suitable partnerships with responsible life insurers for several years, well ahead of the Trowbridge review of the life industry, the history of the industry and its legacy systems, combined with the dominant culture of high up front commissions in the advisory industry, have been impediments to change.
“…We were concerned about the futility of high commission products in that they simply encourage churn,” Mr Wilkins said.
“We welcomed the Trowbridge Report but have always believed in aiming higher by seeking 100% commission-free model. We are delighted that product developers such as BT have been able to create a product that is consistent with our philosophy.”
Mr Wilkins said the commission-free insurance advice framework would be rolled out to all the group’s divisions later this year, once appropriate systems have been put in place.
Findex first announced its intention to move to a fee for service risk remuneration model in May this year.