A long term member of the Association of Financial Advisers (AFA) has called for an Extraordinary General Meeting (EGM) to move that the association opposes the proposed Life Insurance Framework (LIF) reforms.
Dunsford Financial Planning Managing Director, Mark Dunsford, has appealed to AFA members to support a call for the EGM via an email campaign sent through the Life Insurance Customer Group (LICG) and addressed to AFA members of the LICG.
In his letter to members Dunsford stated he intended to call for an EGM of the AFA Board to voice his concerns about the Life Insurance Framework and propose the AFA withdraw its’ support for proposed reforms and oppose the framework in its current form “…because it will provide poor and detrimental outcomes for consumers”.
A proposed special resolution to amend the AFA’s constitution, included in the request for EGM form states the AFA should “…proactively continuously and wholeheartedly oppose the introduction or passing of the former Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 or any other legislation substantially to the same effect or purpose”.
It would also require the AFA to “…canvass wide public and government support for the proposition that that Bill or any other legislation substantially to the same effect or purpose, would be contrary to the public interest”.
…these two activities should be the “…primary and leading object of the Association”
The resolution also stated these two activities should be the “…primary and leading object of the Association” and should be pursued “…using all means reasonably available to the Association”.
Dunsford called on AFA members to complete and return an EGM request form and forward it “…to all the AFA members who feel they should have been consulted and do not agree with the LIF ‘Reforms’”.
In closing his appeal Dunsford stated he was interested in better consumer outcomes against banks and insurers who were offering poor products.
“I wish to reiterate this action is about achieving better outcomes for Australian Consumers and allow good advisers who have served consumers to continue to serve for many years to come,” Dunsford said.
AFA Chief Executive Brad Fox said the association was aware of the request for an EGM but had not yet received a valid request for a meeting and that under the Association’s constitution any request for an EGM would require at least 100 members to complete and return valid forms.
Well done Mark.
Organisations that represent their members…what a novel idea.
Lets get into it !! Where’s my form
Form signed and sent back, Great work Mark!
Yes, where’s my form, I wholeheartedly support this initiative.
Where do I get the form??? Great work Mark Dunsford!!!
Will join the AFA if this goes ahead, have not done so in the past as I felt that along with the FPA they were not at any time acting in the long term interest of the advisers they were supposedly supporting.
Very valuable input Mark with strong points. sending mine in
Great news. Sourcing a form as soon as i hit send…
Michael, where do we get this form???
Thanks…
I have just joined LICG and hope they email me one as can’t find one on AFA website. I would suggest joining LICG.
Hi Michael, I`m a member of LICG and I received my form this morning. I can email it to you if you like.
Thank you Mark! We all need to stand up for our clients and what is fair for all. I have signed the form and forwarded it to at least 50 of my colleagues. I would think the AFA will have 100 signatures before the day is over……
I agree the real issue will be where to hold the meeting ? If the numbers I believe will return their forms we might need to hire ALLIANZ stadium ?
What Fantastic news. About time someone took the AFA to task over this urgent issue with effects all of our Businesses and Incomes. This is so important for us to make a stand against what the Banks are trying to do to us. Thankyou Mark for your courage to stand up. Like Bob I cancelled my membership with the AFA years ago but I would consider rejoining if we can get this stopped.
Well done Mark! Hopefully such a measure will finally make the AFA recognise and admit that up to now, it just has NOT been acting in its members’ best interests and more importantly, the interests of Australians in regard to this appalling situation. I would also add that if the AFA does come to the ball game, then they should clearly state in detail, just what it is they will do in opposing the LIF in its current format!
Thanks to all who have offered a form I have just been emailed one.
Surely the industry must understand that no government is going to support rolling back the LIF reforms as neither politicians or the public is not likely to be on the side of the poor financial adviser who no longer receives their 110% up front commission. A commission which in some cases bears no reflection on the work required to recommend arrange and support the product or strategy and which bloats out the cost of the clients premiums for the life of their insurance policy. Perhaps the AFA can see a loosing battle when they see one and still wish to have a credible voice with key decision makers? For the record I am not a member of the AFA either, but perhaps it is time for advisers to adapt to the inevitable change in the industry dynamic.
Sorry Luke but it attitudes like yours that let these groups run “ruff shot” over whoever they want whenever they want. ? YES change is inevitable in some form but not the proposed one that they have put forward so far. We need to police our own industry as it appears we are the only ones who know how it really works.
Ken, I can’t agree with you. Yes some of the proposed changes are heavy handed and will be very difficult to administer. However, as an industry I don’t believe we are yet to evolve to a point where we are capable of self regulation (there is no requirement to be part of a professional association). Unfortunately, we still see regular cases of churning or incorrect levels of risk protection recommended to clients for the sole purpose of generating commission. While this remains possible, it is difficult for us to argue that the industry does not require oversight. My attitude is born from the fact that our business is almost 100% fee for service and the proposed changes make little impact on our day to day advice process (or client fees). However, while low education requirements and incorrect incentives remain in the industry we will continue to be regulated for the lowest common denominator.
Ken, can you name one industry anywhere in the world where a small percentage of unscrupulous operators don’t exist???
This industry is no different unfortunately but I put it to you that the same small percentage of ‘churners’ (a term that is still yet to be fully and properly defined) could have been stopped in their tracks by the life insurance companies if it wasn’t for their own conflicted remuneration structures that rewarded massive amounts of new business but then hypocritically blamed the entire adviser network when that same business very predictably walked out the door 12 to 15 months later.
This industry is trying to self regulate itself now and not put up with bogus unfair legislation that will adversely affect the industry and the very consumers it is looking to honestly serve.
One of the biggest issues this industry has is when it bundles life insurance brokers / risk insurance advisers with financial planners and thinks that the same remuneration structure should apply to both professions. They absolutely shouldn’t. This is change for change’s sake only.
The claims process for insurance policyholders can take more than 12 months in many cases. Myself and the vast majority of the honest risk insurance advisers I know don’t charge for their time working through the claims process with these clients. Does a financial planner do this? My instincts tell me you’re a financial planner.
Hi Luke, the issue is that the FSC will not stop at the short term recommendations of reduction in commission. Their agenda is 20/20 or no commission at all, and the carve out of direct insurance they are proposing is nothing short of criminal. The people fighting against LIF are fighting for the consumer who will only have direct as an option if the full plans of the FSC come to fruition. I totally agree with you that change needs to happen, however change in the interest of sustainable advice practices and that ACTUALLY benefit the consumer.
Yep. Over 20 claims in the last 4 years. Helped every client complete their claim forms. When a client is on claim these days, the servicing commission stops! So my remuneration for assisting my clients in their hour of need… zero!!! I think there are a lot of people out there who don’t understand how much free work the conscientious Advisers provides. I believe we need to be paid decent upfronts so we can continue supporting our clients at claim time when they need us most.
Sorry Luke, but you are ill informed and have no idea what you are commenting on. You obviously have not followed this sorry saga for as long as the rest of us have, nor worked hard to help thousands of clients over 10, 15, or 20 plus years. Rolling back? The Big 4 have loaded up the FSC with their people for one reason, to prosecute their agenda which is “general advice” on insurance to their massive customer bases with no risk for the advice as none will be given. We, the advisers who put our clients first, are “getting in the way” of this. Until you have had a widow come to you with a Westpac direct marketing “DM” policy covering accidental death only after her husband died of a heart attack age 52 owning the Westpac $2.4 million, thinking they were covered then you don’t have the experience to even comment on this subject.
Luke, It is interesting that your Business is almost 100% fee for service.
Are your Business revenues mostly from Investment, lending, life insurance, General Insurance, Estate Planning, Retirement Planning, broking, etc, or is it a mix of them all?
Secondly, if you charge a fee for Life Insurance advice, how do you break down your charges for the cost of the preparation of advice, inclusive of Fact Finding
appointments, health, Financial and occupation pre-assessments, research, SOA production, presentation of recommendations, alterations to the advice,
completion of applications, following up underwriting, negotiating better terms
for clients, finalising terms, following up all N.B admin to completion, finalisation of all compliance requirements, handling changes to clients circumstances, with the inevitable copious letters and forms to be organised, printed, clients to sign, all to be sent off and continually checked by us due to Life Companies admin systems which can be cumbersome.
Then if clients need to claim, the 10 to 200 hours over a period of weeks and months helping clients to be paid their full entitlements, how do you charge for that?
From my experience, clients will pay an amount for advice, which does not cover a fraction of the cost to deliver, and nil for the mundane admin tasks that they are not aware of or interested in paying for.
If you have found a model where clients will pay separate fees for life insurance as a standalone invoice, that covers all of the above work and an amount to make a profit, please enlighten us.
Hi Luke, with respect I say that it sounds as though you are ideologically opposed to commissions (you dont seem to be alone) but with no substance to support the ideology. I perosnally dont have a problem with removing the 110% + Initial commissions and most advisers I speak to dont either (although ideologically they do…why should govt. dictate how we get paid in a competitive market) I do have a problem with Govt legislating that I should run a stand alone insurance business at a loss. Sure an established business with lots of ongoing revenue can support the loss making up front work but why should insurers be able to push this risk to advisers via govt legislation? Plenty of cases that I have written have been more profitable than others (ie the larger cases + $5k) but it means that I provide advice to those less able to afford insurance premiums (let alone additional fees). Is this not the same principle at the heart of our taxation system? (those better off pay more taxes for services to subsidise those worse off) Fee for service works great for larger cases…I do it myself where the client chooses to do so (The market should then normalise for larger cases as more of us do this, so the large cases are fee for service and the smaller cases are commission based). Im yet to have any clients choose fee for service where their premiums were sub $3k. Unless I loss lead for these clients for other services such as financial planning, super, retirement SMSF etc, these are the clients that will be left to themselves and the direct marketing models of the major banks/insurers with no advice or responsibility. Change is welcomed Luke, lets just make sure it’s in the best interests of clients and not the banks/insurers at the expense of advisers. Inappropriate advice and outcomes for consumers should be the focus of legislation not remuneration. Best Interest Duty already accomplishes this. Just needs to be enforced. If insurers want to clawback commission, have them prove that it was not in the clients Best Interest, report them to the licencee/asic. Clawbacks after 1 year interfere with Best Interest Duty and have unintended consequences, let alone not actually addressing churn as a new adviser recieves no clawback for writing a new policy. Best Interest Duty should trump all other requirements.
Mark, you are a credit to the Life Insurance Industry and all Australians should thank you for what you and all the other LICG volunteers and concerned advisers have done to try and remedy an appalling situation, perpetrated by Self Interest Entities and the disgraceful actions of the FSC, who should be removed from any involvement in future discussions or actions pertaining to the Life Insurance Framework, as they clearly have breached their duty of care.
The concept of Best Interest Duty is obviously beyond their scope or understanding, except when it comes to their own Self Interest.
I would hate to think where Independent advisers, the country and all Australians would be, if not for the tireless work of Mark and all the LICG members who have been able to point out the lies and mis-truths perpetrated by the FSC, aided and abetted by the lack of a cohesive action plan from the AFA and FPA to bring to light the antics, or to stand up for the vast majority of honest advisers who do a great job representing their clients.
A motion should also be tabled that any AFA managers or associated persons who reject what Mark is calling for, be removed in a vote of no-confidence, as clearly they do not represent their members, or the rights of small Business advisers to truly represent all Australians.
Brad Fox should be ashamed of himself by making a statement that in order for the AFA to do their job properly, 100 members and a valid request on the correct valid form should be filled in before they will do anything.
That statement alone tells me that Brad has become Institutionalized and is not capable of doing his job properly.
Jeremy, please note Brad’s statement relates to the constitutional requirements of the AFA to call an EGM. The story has been updated to clarify that point.
Thanks to everyone for the messages, calls and overwhelming support.
For those who wish to sign the resolution, please email:
afaresolution@gmail.com we will send you a form for completion & return.
Regards,
Mark Dunsford.
Well done Mark you are a credit to the Life insurance industry and for the best interests of the important forgotten ones by the FSC and AFA leadership – the customers.
A great opportunity for the AFA to be relevant and meaningful to the Industry it represents and demonstrate a point of difference over other industry bodies. The Governement wants competition in the Finance sector but ever since the GFC when Major Banks were given a ‘leg up’ over second tier institutions with the “Guarantee”, all that has happened (post FOFA) is removal of competition. A similar storm seems to be brewing in the mortgage broking industry with the Government unable to properly understand the situation in Australia so they look at past changes made in the UK. Good work Mark.
Luke, the most condescending inference of your commentary is the promotion or suggestion that poor life insurance advice is generated because of the remuneration model based on commission and the incidence of poor advice is greatly reduced based on a fee for service model. This firstly cannot be stated as there has been no comparative assessment undertaken. Poor insurance advice can simply be as a result of the individual adviser’s lack of knowledge, experience, process and client commitment philosophy.
Your assumption is incorrect and self serving in order to promote your own belief in your business model.
The ASIC Report 413 found that when any other commission model other than Upfront commissions were implemented (ie Hybrid or Level commissions) , the advice success rate was 93%.
So, based on that fact, if you can pull some figures out that illustrate that the fee for service only risk advisers produce a higher advice success rate than 93%, then please provide them so we can all be much better informed.
It is in the consumers best interest to have choice as to how they pay for and receive advice. Some models will suit consumers better than others, but it should never be prescriptive to the point of removing or reducing access to advice for some.
It would also be appreciated if you did not infer that the lowest common denominator were advisers who choose to be remunerated via clearly disclosed commission models who act in their clients best interest and deliver exceptional advice and service.
The AFA Board failed to ask for a member vote and yet signed up to a halving of income and a doubling of responsibility period. Hey Brad let’s halve your income right now if you believe it is so good for us you should set the example and pay half of all your wages back to members today? if a bunch of lone advisers can stop the LIF in its tracks then why didn’t the AFA fight as hard, what have we been paying them for, why are the AFA Board only supporting their sponsors and ignoring the plight of their members? The AFA could have withdrawn support for the LIF at any time which would have signalled to all Politicians that the LIF does not in fact have full industry support. IF the AFA had put up half the case that the LICG seems to have done, we wouldn’t be in this mess. AFA put your members last!
How many seats are up for offer on the AFA board this year ? I heard several ! is that correct ? If this is correct and I emphasise I don’t really know ! Is it that their time as a board member has expired or are they leaving a sinking ship ?
This will surely end well.. A divided industry, with multiple association will now start dividing amongst themselves in public. My favourite comment was the “FSC have breached their duty of care”. A brilliant interpretation of the law. Nobody has a problem with professionals getting paid well for what they do. The important word is ‘professional’. Sadly this chain of comments highlights the problem with the ‘industry’. Luke appears to be on the only contributor with a professional perspective.
Yep, well done Bill. So which of the 4 banks do you work for? What do you do as a profession?
Luke is showing that he does NOT have a grasp on the reality of the situation! As Concerned Risk Specialist as asked – which of the 4 banks do you work for, Bill?
Hi Bill can you tell me why the AFA didn’t bother to put the support for the FSC drafted LIF Legislation to the vote of the members? You know.. the members that look after the Mums and Dads of Australia. Can the AFA point to one positive outcome for advisers or more importantly consumers in the LIF?? If the LICG can mount a strong argument to have the legislation reviewed in favour of consumers, why didn’t the AFA? Your hysterical comments about association collapse is nonsense. The LICG have clearly said is all they want to do is demonstrate to Government that many advisers both inside and outside the AFA have concerns about LIF outcomes for consumers, and there are sufficient numbers to justify the politicians reviewing all the factual data that the LICG have amassed to prove the unintended consequences to consumers. What is wrong with asking for a ‘show of hands’ from the AFA members? surely that is fair enough and should have been done in the first place, unless you have vested interest elsewhere?
I’m finding many of your comments hilarious especially around the ‘form’. Personally sounds like a bit of desperation to talk up your support. Again if there REALLY are over 2,600 supporters of the LICG with many who are allegedly AFA members there should be a MASSIVE response and some validity to these numbers. Again though I calling BS on much of this. And PS you are all so predictable so no, I don’t work for the FSC, AFA, FPA or one of the BIG 4 and no, I won’t state my full name. I am just a fellow member of the financial service industry who is tired of reading mistruths about these LICG numbers and your trolling behavior.
I signed up to the LICG To become a member you have to register with your details. The numbers are automated with different advisers details. The LICG have this number. There are a significantly bigger numbers of AFA and FPC members who agree they have been let down by them and will not support the LIF when given the fair chance of a vote.
You are wrong and you know you are and to be predictable you are obviously a stooge.
Sorry “RC”, forgot to include ‘Stooge’ into my list. Time will tell, 2,600 supporters, you would have surely received the required numbers yesterday by midday easily then, my bad. Have a wonderful afternoon.
LICG 2695 members what a load of rubbish…….I have since “unregistered” to a website I supposedly signed up for and low and behold the number hasn’t changed……May as well put up LICG members 1,000,000 as the number is farcical
Hers a novel idea AFA and FPA EMAIL your members and ask for a simple yes or no
Do you support the LIF in its current form !?
No elaboration yes or no !!
Then you will have accurate numbers Not this we got more
Members then you Itz like a school yard spat !!!
Those that support Dunsford support democracy, those that don’t, support dictatorship. There are no benefits for consumers in the LIF, not one. For AFA members who want to democratically vote for or against, then support the EGM and have your say democratically rather than the naysayers hiding behind false names in a blog. Have your say and ask for the EGM. AFA members can request an EGM form from AFAresolution@gmail.com
Go on, put your money where your mouth is!
LICG 2695 members what a load of rubbish…….I have since “unregistered” to a website I supposedly signed up for and low and behold the number hasn’t changed……May as well put up LICG members 1,000,000 as the number is farcical.
John, glad to see someone else is questioning the validity of those numbers. Whats with that timer too? What is it counting down to? Anyone have any idea?
Hi John, what an original name, you are clearly a stooge for some other organisation, how about we focus on letting the AFA members have a vote on the LIF and have a say in negotiations with government on the future of their industry and the welfare of their clients, or isn’t that important to you.?
When I registered on the LICG website the number clicked up and that is good enough for me. About time we got our priorities right in this debate.
Margaret my only fear is that you are a Financial Adviser in charge of the wealth of Australians. My only hope is you are retired or very near. #embarrassing
WTF John?? I’ll take Margaret’s word and professional opinion as an adviser on this topic over yours any day.
You know all about ‘Margaret’ simply by a first name? Impressive. The force is strong with this one.
I’ll pay that last comment – actually had me chuckling.
Why aren’t financial planners the beneficiaries of an industry compensation scheme like the taxi plate owners in NSW & Vic (and maybe other states)? Arent we suffering a loss to our livelihoods and business values based on the proposed LIF? How can one industry get compensated and another just get shafted?
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