LIF – Will Your Business Change?

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Will you be making changes to your business model to accommodate the remuneration changes contained in the Life Insurance Framework Reforms?
  • Yes (53%)
  • No (33%)
  • Not sure (13%)

Our latest poll asks whether you’re contemplating any changes in your business to accommodate the Life Insurance Framework reforms.

Now that the LIF legislation has been passed, the focus in the life insurance sector appears to be moving away from adviser remuneration to other areas such as professional standards, group and superannuation-related insurance issues, claims management policies and quality of advice monitoring. But as the industry appears to be ‘moving on’ from the sometimes heated and personal LIF debate, we’re keen to stay in touch with you to monitor how your plans are proceeding with your business.

This question mostly relates to risk-focused advice businesses, the majority of which continue to operate on an upfront commission model, and will continue to do so for the rest of 2017.

…more advisers are charging some iteration of fees for their risk advice

It appears that change is in the air in terms of risk business pricing models. In her latest soon-to-be-published Adviser Pricing Models Research Report, Elixir Consulting’s Sue Viskovic has released an interim finding that suggests more risk-focused advisers are incorporating fees into their business equation: “We have certainly found more advisers are charging some iteration of fees for their risk advice, and the numbers of those replacing commissions with fees have lifted from the last report two years ago,” comments Sue (see: More Advisers Charging Fees for Risk Advice).

Anecdotally, risk-focused advisers have indicated to Riskinfo that they will be considering how to build fees into their existing advice proposition, while others have said they will be looking to expand the range of related services they offer in order to compensate for the reduced upfront levels of remuneration to which they will have access from 1 January next year for their existing advice package.

Does this thinking reflect yours, particularly if you operate within a risk-focused advice enterprise? If your business needs to change to accommodate the LIF reforms, do you have the answer? Are you receiving any external assistance from your licensee or your association or your preferred product manufacturers or your peers?

Time to hand over the conversation to you, and we’ll report back next week…



4 COMMENTS

  1. All the outcomes of LIF are bad for clients. I cannot believe no-one on the policy side can see this. Can ANYONE name one benefit to the client from LIF, Just one.

    I think the only way to deal with this is to level the playing field for Advisers and the Direct Insurance salesmen/women. Have the same rules for everyone. BID, SOA with comparisons and full UW on every insurance policy.

    Under LIF, Advisers will have no choice but to provide general advice only for “small” clients (clients with premiums under $5k pa) so we don’t have to waste time with compliance and BID etc or a fee at SOA time. Of course we can give the client 2 options – option 1. give advise as to the types and levels of cover and the set up with projections and my expertise on which policies are better (cost $2k advice fee) and abide by BID, or option 2. i give you some general advice and you decide what you want and the products you require (no fee) no BID no liability on the adviser if the claim doesnt pay. Wow, as an adviser it would be much easier to write business under option 2 with no fear of litigation and no help at claim time. Why would i even remain an adviser, i may as well just provide general advice. Imagine NO BID or SOA each time. just fill in this app and away we go, and we get paid the same commission.

    If clients no longer get advice, 99% of them will just get the cheapest policy and an inappropriate benefit amount/set up which will not pay out at claim time and if it does pay out then 30% of the total will have to be paid to a lawyer to handle the claim. Other than increasing the profits of the Insurers and reducing access to advisers for mums and dads this was one of the intended outcomes of LIF. Lawyers make rules which will see their businesses thrive and insurance claims are their golden goose. Advisers are ruining their business model by handling claims for free.

    Maybe advisers should build a claims handling fee into their contract. If we got the clients to sign away 30% of their total benefit at claim time then everyone wins (other than the lawyers, but they aren’t really people anyway). The client would have lost that 30% to a lawyer anyway, the claim gets handled properly and the client gets paid and an advised policy.

    • Could not agree more with you Jake, there should have been a fourth option to the question,” are you going to stay in business”? It would be interesting to see that result

  2. Yes, I’m considering changes – everything from INCREASING my commission rate from the discount I give each client currently (no more of that to help clients now) to closing my business and retiring. Don’t know what I will do as I love looking after my fave clients as it is and I’d feel like I was letting them down.
    .
    The term ‘client best interest’ is just so much lip service to life companies – PROVE me wrong I dare anyone. How can they be concerned for clients if they are doing all they can to remove advisers from the distribution channel? 2 year clawback and diminished, unworkable commissions. They want advisers GONE so they have NO more commissions to pay and distribute online, underwrite online and deny claims ONLINE! God help ordinary Australians.
    Advisers are the ONLY ones who are ‘trying’ to act in their best interests and we are the ones being castigated and raped at every turn. Corruption isn’t just in the movies boys and girls.
    Advisers are the ONLY ones who are ‘trying’ to act in their best interests and we are the ones being castigated and raped at every turn. Corruption isn’t just in the movies boys and girls.

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