One in Two Risk Advice Businesses to 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 result suggests around one in two risk-focused advice practices will be making changes to their business model to accommodate the advent of the Life Insurance Framework reforms.

In a poll where the risk-focused advice business is the centre of attention, this 50/50 outcome reaffirms, amongst other take-outs, that not all risk-focused advice practices are structured the same way. In fact, we’ve found over time that all advice businesses are unique and that a myriad of different business models exist – some of which, it seems, have more work in front of them than other risk-focused advice business models in order to cater to the LIF reform imperatives.

Adviser comments to date mention a number of potential adjustments that they believe may occur, such as the need to differentiate in future the clients for whom the business can afford to provide personal advice:

“Under LIF, Advisers will have no choice but to provide general advice only for “small” clients (clients with premiums under $5k pa)”

The same adviser added (within the context of more legal firms becoming involved in representing policy holders at claim time):

“Maybe advisers should build a claims handling fee into their contract.”

Elsewhere, well-respected WA risk adviser, Mark Rando, has written in the current edition of Riskinfo eMagazine about his strategy of charging a fee for the provision of his Statements of Advice, which also includes a commitment from the client to make up any remuneration shortfall to the business as a result of clawback provisions (see: Managing Clawback).

We also referred last week to another article in which we reported growing evidence that more advisers are charging fees for risk advice (see: More Advisers Charging Fees…), but the jury is still out on the extent to which this applies to risk-only and/or risk-focused business models.

If not already here, change is just around the corner for many of Australia’s risk-focused advice businesses, as indicated by the 52% at time of writing who are saying their business is about to change. Is this you? Or are you one of the 36% who say you won’t be changing or the one in eight (12%) who are yet to decide?

Our poll remains open for another week and we welcome your thoughts on this question…



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2 COMMENTS

  1. At the moment ? Wait til reality hits and two more consecutive commission cuts dig in !! OH!! AND DONT FORGET THE 2 YEARS RESONSIBILITY PERIOD

    • Yes Ken, indeed . . . how many times do we have to shout this from the rooftops? Nobody listens to reason. Or clients, Or advisers. By “nobody” I mean the parties responsible for the slowly encroaching fraud on clients and advisers – you know, by the politicians, life companies (majority of them) and special interest groups who say ‘risk-only’ fees can be our answer. You know the types. . . . . ‘Client best Interest’ must be seen as a running joke and concept of derision behind closed doors among these peasants. Their actions and inactions simply confirm this as a self evident truth.

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